Soft Budget Constraints Will Lead to

question 26

Multiple Choice

Soft budget constraints will lead to

• A)inefficiency
• B)quick responses to changes in supply and demand
• C)good investment decisions
• D)high product quality
• E)managers eager to satisfy consumer demand rather than production quotas

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Definitions:

Not Sufficient Funds

A term used by banks to indicate that a check cannot be honored because the account on which it was drawn does not have enough money.

NSF Check

A cheque that has been returned by the bank because it cannot be honored due to insufficient funds in the account.

Bank Statement

A summary issued by a bank detailing all transactions in an account over a specific period.

Outstanding Checks

Checks that have been issued by a company but have not yet been cashed or cleared by the bank.