Since the End of World War II,the U

question 46

Multiple Choice

Since the end of World War II,the U.S.has almost always had rising prices and an upward trend in real GDP.To explain this

• A)it is only necessary that long-run aggregate supply shifts right over time.
• B)it is only necessary that aggregate demand shifts right over time.
• C)both aggregate demand and long-run aggregate supply must be shifting right and aggregate demand must be shifting farther.
• D)None of the above cases would produce rising prices and growing real GDP over time.

Apply the appropriate cost of capital for evaluating capital budgeting projects based on funding sources.

Recognize the bases for the component costs of capital.

Compare the cost of external equity with the cost of retained earnings and understand flotation costs.

Evaluate the conditions under which retained earnings should be considered the first source of capital.

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Definitions:

Assets

Resources owned or controlled by a business that are expected to produce economic benefits.

Liabilities

Financial obligations or debts owed by a company to external parties or individuals, expected to be settled through the outflow of resources.

Materiality

An accounting principle that means the significance of financial information to decision makers, considering its size or its nature.

Relevance

The importance of financial information in making economic decisions, ensuring that the data presented affects the users' understanding and actions.