Economic Rationality

question 10

Multiple Choice

Economic rationality

• A) implies that people have an objective and pursue it in a consistent fashion.
• B) implies that people's behavior does not adapt when incentives change.
• C) implies that there is no such thing as a free lunch.
• D) can be directly proven.

---

Definitions:

Indirect Method

An approach used in cash flow statements to reconcile net income with cash flow from operating activities, adjusting for non-cash transactions.

Accumulated Depreciation

The cumulative value of depreciation expense assigned to a physical asset since it was first utilized.

Statement of Cash Flows

A financial statement showing the cash inflows and outflows for a business over a specific period.

Operating Activities

Financial transactions and events related to the core business functions, including revenue and expense activities affecting cash flow.