The Scientific Method and the Tools of Economics Are Useful

question 147

Multiple Choice

The scientific method and the tools of economics are useful in examining

• A) only how individuals make decisions.
• B) only how business firms make decisions.
• C) only how government policies affect macroeconomic outcomes.
• D) only the trade-offs evident in the production possibilities frontier (PPF).
• E) anything; economists will use their tools to study anything in the world around them.

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Definitions:

Cash Flow

The net amount of cash and cash-equivalents being transferred into and out of a business.

Monthly Cash Expenses

The total amount of cash payments made by a business within a month to cover its operational expenses and obligations.

Cash On Hand

The total amount of cash or cash equivalents that a business or individual has accessible immediately.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.