All of the following are advantages of partnerships except one. Which is the exception?
a. they are relatively easy to start
b. their profits are taxed once as personal income
c. their liability is limited by each partner's share of the business
d. a greater opportunity for specialization by the owners
e. a continuation of the firm if one partner dies
C
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Using international asset trade, countries can
A) never really eliminate all risk. B) eliminate all risk. C) actually increase their risk in some cases. D) eliminate all their risk except for emerging markets. E) never really diversify their holdings.
Over the past several years, the federal government has rescued a few financially distressed banks and other large private companies, and the key reasons for these actions is to stabilize financial markets and to prevent additional business failures
that may arise from the original problem. However, critics of these interventions argue that these actions generate a moral hazard problem. Why? A) Government oversight of rescued firms is typically based on limited information, so the outcome is economically inefficient. B) Rescued firms will have a difficult time buying insurance in private markets, so the government will also have to insure the firm against losses from fire, theft, etc. C) Managers have more information about the financial strength of their firm than government officials, so the rescue attempts may be unnecessary. D) Managers may be more likely to invest in risky projects if they believe the government will save the firm in case of failure.
A recession can be expected to reduce inflation in the economy if the recession is caused by a(n)
a. increase in aggregate demand. b. increase in aggregate supply. c. decrease in aggregate demand. d. decrease in aggregate supply.
Which government sector has the ability to respond countercyclically to the economy?
A. Federal only. B. Local only. C. State only. D. Federal, state, and local.