Which Statement Is Correct

question 11

Multiple Choice

Which statement is correct?

• A)Short-term assets should be financed by long-term liabilities.
• B)Long-term liabilities should be used to finance long-term assets.
• C)Short-term liabilities should be used to finance long-term assets.
• D)None of the above.

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Definitions:

Automatic Stabilizers

Economic strategies and initiatives aimed at stabilizing a country's economic fluctuations without further action from the government or policy makers.

Built-in Stabilizer

Economic policies or instruments, like progressive taxation and welfare, that automatically reduce the amplitude of economic fluctuations without additional government intervention.

Progressive Income Tax

A tax system in which the tax rate increases as the taxable amount increases, generally applied to income tax to ensure higher earners pay a larger percentage of their income.

Unemployment Compensation

Unemployment Compensation is a government-provided financial assistance to individuals who have lost their job through no fault of their own, aiming to support them temporarily.