Which One of the Following Is Least Likely to Explain

question 48

Multiple Choice

Which one of the following is least likely to explain why entrepreneurs contribute their personal funds to start-up projects? Their contribution:

• A) acts as a signal to venture capitalists.
• B) repays debt held by the venture capitalist.
• C) retains a portion of the firm's equity.
• D) provides incentive to expend effort.

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Definitions:

Money Demand

The total amount of money that households and businesses wish to hold in the form of cash or deposits, at a given time.

Quantity of Money

The total amount of money available in an economy, including currency and balances held in checking and savings accounts.

Prices Fall

A situation where the amount of money required to purchase goods or services decreases, typically due to reduced demand or increased supply.

Quantity Theory

An economic theory that relates the level of money supply in an economy to the level of prices and the volume of production.