Economic Theories

question 95

Multiple Choice

Economic theories:

• A) are useless because they are not based on laboratory experimentation.
• B) that are true for individual economic units are never true for the economy as a whole.
• C) are generalizations based on a careful observation of facts.
• D) are abstractions and therefore of no application to real situations.

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Definitions:

Working Capital Decision

Decision making related to managing a company's current assets and liabilities to ensure operational efficiency and financial stability.

Capital Budgeting

The process businesses use to evaluate potential major projects or investments, assessing the value they may add to the company.

Capital Intensity Ratio

A metric that measures the amount of capital needed per unit of output, indicating how capital-intensive a business is.

External Financing Needed (EFN)

The amount of financing required to balance both sides of the statement of financial position.