Time Bunching Tends to Amplify Business Cycles Because

question 84

Multiple Choice

Time bunching tends to amplify business cycles because:

• A) assets are typically worth more in booms than in recessions.
• B) the returns to work are higher in booms than in recessions,so people work more during booms and less during recessions.
• C) the returns to investment are higher when others are investing as well,thus we see more investment during booms and less during recessions.
• D) the uncertainty of recessions tend to increase people's job search time,while greater certainty decreases search time during booms.

Identify and explain the concepts of float in cash management.

Understand the strategic significance of collection and disbursement floats in cash management.

Comprehend the BAT and Miller-Orr models for managing cash balances.

Define and explain the use of money market instruments in liquidity management.

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Definitions:

Spot Rate

The present market rate at which a specific asset, like a currency, commodity, or security, is available for purchase or sale with immediate delivery.

Relative Purchasing Power Parity

A theory stating that changes in exchange rates between currencies are influenced by changes in the countries' price levels, maintaining the purchasing power of each currency.

Exchange Rates

The exchange value of one currency for another.

Inflation Rates

The measure of how fast the standard price for services and products ascends, directly impacting the reduction in purchase power.