Economic Efficiency Requires That Costs Associated with the Expansion and Utilization

question 73

Multiple Choice

Economic efficiency requires that costs associated with the expansion and utilization of capital be balanced against the

• A) future increases in output derived from improved tools and production methods.
• B) reduction in future employment due to automation.
• C) indirect costs of capital goods.
• D) need to maintain a reserve army of the unemployed.

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Definitions:

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, recognizing the asset's wear and tear, deterioration, or obsolescence.

Indirect Method

A way of calculating cash flows in the statement of cash flows where net income is adjusted for non-cash transactions and changes in working capital.

Inventory Increase

A rise in the quantity or value of goods and materials that a company holds for the purpose of sale or production.

Investing Activities

Transactions involving the purchase or sale of long-term assets and investments, reflected in the cash flow statement.