In the eyes of the law, a corporation is a legal "person," separate from its owners. Explain what this means
What will be an ideal response?
This means that the firm is a separate legal entity from its owners. Under the corporate form of business, the owners of a firm have limited liability, which means that if the firm fails, the owners can never lose more than the amount they have invested in the firm. The personal assets of the owners of the firm are not affected by the failure of the firm.
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Which of the following will lead to a decrease in the gross domestic product of a country?
A) An increase in the expenditure on investment B) An increase in exports C) A decrease in the expenditure incurred by the government D) A decrease in imports
The economic decisions of central planners often are wrong because they have little understanding of
a. local economic conditions b. bureaucracies c. Karl Marx's theories d. democracy
The reserve ratio is 10 percent. After the Fed buys $1 million in U.S. government securities from a bond dealer by transmitting the funds to the dealer's deposit account at Bank A, Bank A lends a construction company an amount equal to its excess reserves. The construction company spends the entire amount on lumber from a lumber yard, which deposits the construction company's check in its deposit account with Bank A. The maximum loan Bank A can now make is
A. $100,000. B. $1 million. C. $810,000. D. $900,000.
The proportion of the labor force that is unemployed is the
A. Unemployment rate. B. Okun's Law. C. Employment index. D. Underemployed rate.