Which of the Following Is Most Likely to Occur If

question 132

Multiple Choice

Which of the following is most likely to occur if a firm under-invests in net working capital?

• A) The firm might not have sufficient cash to pay its bill in a timely manner.
• B) The firm might not have adequate inventory to meet the needs of its customers.
• C) The firm could be losing sales because its terms of sale are too strict.
• D) All of the above.

---

Definitions:

Natural Rate

The long-term rate of an economic variable, such as unemployment or interest, that is not influenced by cyclical or short-term factors.

Long-Run Phillips Curve

A visual representation showing the relationship between inflation and unemployment rates, suggesting that in the long run, there is no trade-off between inflation and unemployment.

Money Supply

The sum total of financial assets available in an economy at a certain point in time.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling over a specific period.