A Normative Economic Statement

question 248

Multiple Choice

A normative economic statement:

• A) is a model used to collect data.
• B) is a statement of fact.
• C) is a statement of what ought to be, not what is.
• D) indicates what will occur if certain assumptions are true.

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Definitions:

Retained Earnings

Profits that a company keeps after dividends have been paid out to shareholders, used for reinvestment in the business or to pay down debt.

Capital

Resources made and used by people to produce and distribute goods and services; includes tools, machinery, and buildings.

Interest Rates

Charges applied on borrowed money or earned through deposits, varying according to the type, term, and risk associated with the financial product.

Present Value

The present value of a future sum of money or series of cash flows, discounted at a certain rate of return.