The "Marginal Principle of Retained Earnings" Holds That Corporate Investment

question 58

True/False

The "marginal principle of retained earnings" holds that corporate investment should provide a return equal to or higher than that a stockholder could earn.

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Definitions:

Governmental Intervention

Actions taken by a government to affect the economy, which can include regulations, subsidies, and taxes.

Discretionary Policy

Economic policies based on judgment decisions by policymakers, as opposed to rules-based policies, to manage the economy.

Policy Tools

Policy tools are mechanisms used by government or monetary authorities to influence the economy, such as interest rates, taxation, and government spending.

Economy's Potential

The economy's potential refers to its maximum productive capacity when resources are fully employed, indicating a state where unemployment is at the natural rate and there is no demand-pull inflation.