Which of the Following Is an Example of an Unintended

question 108

Multiple Choice

Which of the following is an example of an unintended consequence?

• A) Competition between two businesses causes each to lower prices.
• B) A tax rebate on electric cars results in increased household electricity consumption.
• C) A tax cut leads to a spike in consumer spending.
• D) Low interest rates encourage businesses to borrow money from banks.
• E) A welfare program causes individuals to purchase necessities and seek employment.

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Definitions:

AAR

Average Annual Return; calculating the mean annual return of an investment over a specified time period.

Discounted Payback

An investment appraisal method that calculates the time required to break even in present value terms, factoring in the time value of money.

Operating Cash Flow

The cash generated from the normal operating activities of a business in a specific time period.

Net Working Capital

The difference between a company's current assets and current liabilities, used to measure its short-term financial health.