What Is a Precautionary Balance

question 77

Multiple Choice

What is a precautionary balance?

• A) the cash a firm holds to counter the uncertainty surrounding its future cash needs
• B) the cash a firm places into short-term investments
• C) the cash a firm holds in order to pay its bills
• D) the cash a firm holds to gain tax advantages

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Definitions:

Economic Problem

The issue of limited resources with unlimited wants, necessitating choices about what and how to produce for society.

Crop Insurance Programs

Governmental or private insurance schemes designed to protect farmers against the financial losses due to crop failures caused by weather or other unforeseen factors.

Agricultural Act

Legislation aimed at regulating agricultural markets, prices, and subsidies; specifics depend on the country and the time period.

Food, Conservation, and Energy Act

A law enacted by the United States governing agriculture, forestry, and food policy, also known as the 2008 Farm Bill.