If You Had a Windfall of $5,000 in the Present

question 22

Multiple Choice

If you had a windfall of $5,000 in the present time period and you save some of it, your saving behavior would likely be due to the fact that

• A)Your marginal utility of present income falls as your income goes up
• B)The extra income changes the slope of your time preference indifference curves making then steeper
• C)Your indifference curves for present and future income are vertical
• D)Your indifference curves for present and future are horizontal

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Definitions:

Return on Assets Ratio

A financial metric that measures how profitable a company is in relation to its total assets, indicating how efficient management is at using assets to generate earnings.

Total Assets

The summation of all the company's assets, including those that are tangible and intangible, which are owned and can provide economic value.

Net Profit

The financial gain remaining after subtracting all expenses, taxes, and costs from total revenue, indicating the overall profitability of a business.

Fixed Asset Turnover Ratio

A financial metric that measures a company's efficiency in using its fixed assets to generate sales, calculated by dividing sales by the book value of fixed assets.