Which of the Following Statements Is False

question 6

Multiple Choice

Which of the following statements is false?

• A) In reality, product markets are rarely perfectly competitive, so firms can maximize their value by using their trade credit options effectively.
• B) Trade credit is, in essence, a loan from the selling firm to its customer.
• C) The accounts receivable balance represents the amount that a firm owes its suppliers for goods that it has received but for which it has not yet paid.
• D) Providing financing at below-market rates is an indirect way to lower prices for only certain customers.

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Definitions:

Equation of Exchange

Shows the relationship among four variables: M (the money supply), V (velocity of circulation), P (the price level), and Q (the quantity of goods and services produced). MV = PQ.

Quantity Theory of Money

A theory suggesting that the general price levels of goods and services are directly proportional to the money supply in an economy.

Equation of Exchange

An economic equation that represents the relationship between money supply, its velocity, price level, and the volume of transactions in an economy.

Velocity of Circulation

A measure of the rate at which money is exchanged in an economy, typically calculated as the ratio of nominal GDP to the money supply.