Ignoring the Risk of Theft, Cash Balances Cannot Spoil, Yet

question 106

Multiple Choice

Ignoring the risk of theft, cash balances cannot spoil, yet managers are concerned with carrying costs.Why?

• A)the federal government may devalue the currency
• B)higher balances require additional supervisors
• C)cash balances are idle and face an opportunity cost
• D)embezzlement is a real risk in most firms

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Definitions:

Labor-Abundant

Describes an economy or sector that has a high availability of labor relative to capital.

Land-Abundant

A description of a country or region that has a large amount of land available for agriculture or development relative to other inputs.

Urbanized

Characterized by or pertaining to regions that are densely populated with humans and typically have a lot of developed infrastructure.

Heckscher-Ohlin Model

An economic theory that explains international trade in terms of differences in the relative endowments of factors of production among nations, suggesting that countries will export goods that make intensive use of locally abundant factors.