Which Statement Is True

question 41

Multiple Choice

Which statement is true?

• A)Dividends are evenly distributed by a wide range of companies in various industries and of varying sizes.
• B)Unanticipated changes in dividends can affect stock prices.
• C)Managers never cut dividends.
• D)Cash dividends and stock repurchases have increased in nominal terms but decreased in real terms.
• E)Managers tend to increase dividends rapidly when transitory earnings rise.

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Definitions:

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource, such as labor or capital.

Marginal Physical Product

The additional output that is produced by employing one more unit of an input, holding other inputs constant.

Substitution Effect

The economic understanding that as prices rise, or income decreases, consumers will replace more expensive items with less costly alternatives.

Output Effect

The impact on total production and economic output resulting from changes in price levels, influencing the quantity supplied or demanded.