Firms That Do Not Have to Secure Financing to Carry

question 52

Multiple Choice

Firms that do not have to secure financing to carry out their financial plans are said to have:

• A)Excessive hordes of cash
• B)Financial slack.
• C)Low plans for investing
• D)Deteriorating credit quality

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Definitions:

Real Value

Reflects the purchasing power of an amount of money, considering inflation, and contrasts with nominal value, which does not take inflation into account.

Money Holdings

The quantity of money an individual or entity holds as a store of value and medium of exchange.

Classical Dichotomy

The theoretical separation of nominal variables (such as money supply and prices) from real variables (like output and employment) in the economy, suggesting that nominal variables do not affect real output in the long run.

Nominal Variables

Variables measured in monetary units that have not been adjusted for inflation, reflecting current prices.