Assuming Inflexible Prices, If the Demand for Many Goods and Services

question 50

Multiple Choice

Assuming inflexible prices, if the demand for many goods and services falls across the entire economy and for an extended period of time:

• A)many firms will face a constant reduction in their inventories.
• B)many firms will face with an inventory pile up and will be forced to cut production.
• C)many firms will face with an inventory pile up and will be forced to hire more workers.
• D)many firms will face a constant reduction in their inventories and will be forced to hire more workers.

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Definitions:

Stock Dividends Distributable

A portion of a company's retained earnings that is allocated to be distributed to shareholders as additional shares of stock.

Equity Account

An account representing the owner's or shareholders' interest in a company, reflecting capital invested plus retained earnings minus withdrawals.

Shares "Owed"

Likely incorrect or a misunderstanding; potentially refers to shares that are borrowed and need to be returned in transactions such as short selling (NO real key term).

Cash Dividend

This is a payment made by a company out of its earnings to its shareholders, usually in the form of cash.