Suppose there is a reduction in cash flow.This suggests that
A)firms have decreased their expectations of future profits.
B)the real interest rate has increased.
C)the rate of depreciation has increased.
D)current profits have decreased.
E) all of the above

Question

Quizplus · Accepted Answer

A reduction in cash flow suggests that the current profits of the firm have decreased as it is the primary source of cash. Options A and B are unlikely to be the primary cause of this reduction in cash flow. Option C may impact cash flow indirectly, but it is not a direct cause. Therefore, option D is the most appropriate choice.

Suppose There Is a Reduction in Cash Flow