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Author Question: Explain why using a firm's profits to reinvest in the company is really not free borrowing? What ... (Read 29 times)

craiczarry

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on: Jun 29, 2018
Explain why using a firm's profits to reinvest in the company is really not free borrowing?
 
  What will be an ideal response?

Question 2

In the long run, the Fed may decrease the unemployment rate only if it is willing to increase the rate of inflation.
 
  Indicate whether the statement is true or false


Swizqar

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The profits that the company is using could have alternative uses. Whatever those are determines the cost of using them to reinvest in the company. Therefore, the funds are really not free to use.

Answer to Question 2

FALSE


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