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C. a more permanent government involvement in the banking system, even creating a pational banking system that owns and operates most of the global and regional banks. Deshort-term increases in government spending to stimulate the economy. 20. When describing the state of the U.S. economy, reporters often refer to the nation's GDP, its unemployment rate, and the CPI. Explain what each of these terms means and why each measure is significant. 21. Explain the difference between fiscal policy and monetary policy. Discuss how each of these approaches can be used to influence the state of the economy and who utilizes these policies. 22. "Actions speak louder than words!" is an old saying that refers to the fact that people's actions-how they act as opposed to what they say-are often testament to their true ethical values. 23. The corporation is the most common form of business ownership. 24. The three major forms of business ownership in the U.S. are sole proprietorships, partnerships, and corporations. 25. The first step in starting a sole proprietorship is to fill out a proprietorship charter application form and file it with the state government. 26. The profits of a sole proprietorship are taxed as the personal income of the owner. 27. Most states have legal restrictions that prevent individuals from incorporating. 28. Delaware is a popular state in which to seek incorporation due to its reduced costs and other perks. 29. To change ownership in a corporation you simply sell your stock to someone else. 30. One advantage of an 5 Corporation is that the profits are distributed to the owners and taxed as each owner's personal income, thus avoiding the problem of double taxation autorech US 31. In a sole proprietorship, the profits earned by the business are: A. taxed as income for the business, but exempt from the personal income tax paid by the owner. B. taxed at the lowest corporate rate. the property of the owner, except for taxes owed to the government. D. tax-free if the appropriate exemption is filed with the local government. 32. If demand barely exists and supply is plentiful you might expect A) Price to remain the same, B) Price to be low enough, C) Demand and supply to have no meeting point or D) A need for more. 33. In order to enjoy the highest standard of living possible, comparative advantage theory states that all nations should strive to become self-sufficient. 34. After finishing college, Nathan joined his uncle's company in Miami, FL, a company that buys bauxite, copper, and other minerals from the country of Chile, and brings them into the U.S. Everyday, he brokers trades with mines in Chile. His uncle's company is in the export business. 35. Small businesses are less involved in global trade today than in the past. 36. The company was informed by the Japanese Ministry of Trade that they could only export 1.5 million pairs of eyeglasses to the Japanese market during a given year. The Japanese have imposed a(n): A. revenue tariff. B. embargo C. import quota D. limit order. 37. Barney extends his lunch break beyond the allotted time. Wilma uses the office telephone for unauthorized personal phone calls. Fred misrepresents his product to a potential customer. All of these are examples of unethical behavior. 38. As the human resources director for your company, it is your job to evaluate the company's benefits plan. Although several workers utilize the company day care facility, the facility costs the firm considerably more than another benefit might cost, such as having an on-site physician. The on-site physician services are supported by insurance, and the physician actually rents space from the company. Under these circumstances, eliminating the day care is a balanced decision. and Mac operate as a 39. Being your own boss means: A. reducing your working hours. B. having the freedom to set your own working hours and taking lots of vacations, particularly when just beginning the business. C. accepting accountability for the mistakes of the business D. having limited financial resources to throw into the business 40. Joe Jackson operates a sole proprietorship, but he is in poor health and may be unable to continue running the business. If Joe becomes incapacitated, his business: A. automatically continues under new management as a sole proprietorship. B. automatically converts into a public corporation with stock sold to interested investors. C. ceases to exist unless sold or taken over by Joe's heirs. D. becomes the property of the most senior employee who wishes to continue operating the firm. 41. A partner (owner) who invests money in a business does not take an active role in managing the operation, and is only subject to losing the funds he/she invested. A. implied partner. B. limited partner. C. partial partner. D. corporate partner. 42. When comparing general partnerships to sole proprietorships, an advantage of partnerships is that they: A. are less risky, because each partner is responsible for only a specified fraction of the firm's debts. B. are easier to terminate. C. cost less to organize. D. give the firm a stronger financial foundation. 43. A good reason why partners should spell out the details of their partnership arrangements in writing is: A. the partnership is not a legally recognized business unless they do so. B. a written agreement will help reduce misunderstandings and disagreements among the partners. C. putting the agreement in writing will limit the liability of each partner to a specified level. D. doing so will make it easier to convert the business to a corporation at a later date. 44. Zach and Mac own an auto repair business that they operate as co-owners. Both taken active role in the management of the business, and each accepts unlimited ability. Each and Mac operate as a A joint venture B. general partnership C. limited partnership D. cooperative 45. Jamie and Maria invested all their savings in a small pizzeria they opened outside the University of Western Kentucky. They operated the business as a general partnership After 11 months, the business went broke and Jamie and Maria were left with outstanding bills of $37,500, which was more than their initial investment in the company. Jamie and Maria can: A. lose their personal assets as the result of their company's financial problems. B. lose only the funds they originally invested in their company. C. lose only the total value of the assets actually used to operate the business. D. avoid any liability for these debts since a partnership is considered to be a business entity that is separate and distinct from the partners who own it. 46. Ain) _ is a state-chartered legal entity with authority to act and to have liability separate from its owners. A. limited partnership B. conventional corporation C. unlimited partnership D. nonprofit organization 47. An owner of a corporation is known as a(n): A. general partner. B. limited partner. C. director D. stockholder. 48. Which of the following statements about the operation of a corporation is correct? A. A corporation receives its charter from a state government. B. A corporate charter automatically expires in 99 years and must be renewed if the corporation wants to remain in business. C. Owners of a corporation have unlimited liability for any claims against their company D. A corporation tends to be much easier to set up than a sole proprietorship or partnership. 49. Compared to partnerships and sole proprietorships, a major advantage of the C (conventional) corporation as a form of business ownership is that it A. has the ability to raise more money. B. is easier and less expensive to form. C. qualifies for simplified tax treatment. D. creates unlimited liability for its owners. 50. An evaluation of franchising would conclude that this type of arrangement: A. has become the dominant form of business organization in the United States because it has many advantages and almost no disadvantages B. appeals to people who want to own a business, but are not comfortable starting a company from scratch. C. has a much higher risk of failure than independent companies. D. has little chance of success outside the United States because many foreign countries do not allow such arrangements. 51. Daggie's Sandwiches, Inc., sells the rights to use its name and sell its sandwiches in a given market area to aspiring businesspeople who are willing to pay agreed-upon fees and meet certain contractual terms. Daggie's: A. is offering investors the opportunity to form limited partnerships. B. is a franchisor. C. creates private subsidiary companies. D. offers a tax-free investment potential. 52. A prospective franchise owner wants to keep his monthly costs at a minimum. The franchisor he is reviewing is advertising that royalty payments of 8% of sales could be as high as $250,000 per month. The franchisor is claiming that a franchisee can expect monthly sales to be as high as: A. $2,125,000 B. $2,000,000 C. $3,125,000 D. $200,000 C. a more permanent government involvement in the banking system, even creating a pational banking system that owns and operates most of the global and regional banks. Deshort-term increases in government spending to stimulate the economy. 20. When describing the state of the U.S. economy, reporters often refer to the nation's GDP, its unemployment rate, and the CPI. Explain what each of these terms means and why each measure is significant. 21. Explain the difference between fiscal policy and monetary policy. Discuss how each of these approaches can be used to influence the state of the economy and who utilizes these policies. 22. "Actions speak louder than words!" is an old saying that refers to the fact that people's actions-how they act as opposed to what they say-are often testament to their true ethical values. 23. The corporation is the most common form of business ownership. 24. The three major forms of business ownership in the U.S. are sole proprietorships, partnerships, and corporations. 25. The first step in starting a sole proprietorship is to fill out a proprietorship charter application form and file it with the state government. 26. The profits of a sole proprietorship are taxed as the personal income of the owner. 27. Most states have legal restrictions that prevent individuals from incorporating. 28. Delaware is a popular state in which to seek incorporation due to its reduced costs and other perks. 29. To change ownership in a corporation you simply sell your stock to someone else. 30. One advantage of an 5 Corporation is that the profits are distributed to the owners and taxed as each owner's personal income, thus avoiding the problem of double taxation autorech US 31. In a sole proprietorship, the profits earned by the business are: A. taxed as income for the business, but exempt from the personal income tax paid by the owner. B. taxed at the lowest corporate rate. the property of the owner, except for taxes owed to the government. D. tax-free if the appropriate exemption is filed with the local government. 32. If demand barely exists and supply is plentiful you might expect A) Price to remain the same, B) Price to be low enough, C) Demand and supply to have no meeting point or D) A need for more. 33. In order to enjoy the highest standard of living possible, comparative advantage theory states that all nations should strive to become self-sufficient. 34. After finishing college, Nathan joined his uncle's company in Miami, FL, a company that buys bauxite, copper, and other minerals from the country of Chile, and brings them into the U.S. Everyday, he brokers trades with mines in Chile. His uncle's company is in the export business. 35. Small businesses are less involved in global trade today than in the past. 36. The company was informed by the Japanese Ministry of Trade that they could only export 1.5 million pairs of eyeglasses to the Japanese market during a given year. The Japanese have imposed a(n): A. revenue tariff. B. embargo C. import quota D. limit order. 37. Barney extends his lunch break beyond the allotted time. Wilma uses the office telephone for unauthorized personal phone calls. Fred misrepresents his product to a potential customer. All of these are examples of unethical behavior. 38. As the human resources director for your company, it is your job to evaluate the company's benefits plan. Although several workers utilize the company day care facility, the facility costs the firm considerably more than another benefit might cost, such as having an on-site physician. The on-site physician services are supported by insurance, and the physician actually rents space from the company. Under these circumstances, eliminating the day care is a balanced decision. and Mac operate as a 39. Being your own boss means: A. reducing your working hours. B. having the freedom to set your own working hours and taking lots of vacations, particularly when just beginning the business. C. accepting accountability for the mistakes of the business D. having limited financial resources to throw into the business 40. Joe Jackson operates a sole proprietorship, but he is in poor health and may be unable to continue running the business. If Joe becomes incapacitated, his business: A. automatically continues under new management as a sole proprietorship. B. automatically converts into a public corporation with stock sold to interested investors. C. ceases to exist unless sold or taken over by Joe's heirs. D. becomes the property of the most senior employee who wishes to continue operating the firm. 41. A partner (owner) who invests money in a business does not take an active role in managing the operation, and is only subject to losing the funds he/she invested. A. implied partner. B. limited partner. C. partial partner. D. corporate partner. 42. When comparing general partnerships to sole proprietorships, an advantage of partnerships is that they: A. are less risky, because each partner is responsible for only a specified fraction of the firm's debts. B. are easier to terminate. C. cost less to organize. D. give the firm a stronger financial foundation. 43. A good reason why partners should spell out the details of their partnership arrangements in writing is: A. the partnership is not a legally recognized business unless they do so. B. a written agreement will help reduce misunderstandings and disagreements among the partners. C. putting the agreement in writing will limit the liability of each partner to a specified level. D. doing so will make it easier to convert the business to a corporation at a later date. 44. Zach and Mac own an auto repair business that they operate as co-owners. Both taken active role in the management of the business, and each accepts unlimited ability. Each and Mac operate as a A joint venture B. general partnership C. limited partnership D. cooperative 45. Jamie and Maria invested all their savings in a small pizzeria they opened outside the University of Western Kentucky. They operated the business as a general partnership After 11 months, the business went broke and Jamie and Maria were left with outstanding bills of $37,500, which was more than their initial investment in the company. Jamie and Maria can: A. lose their personal assets as the result of their company's financial problems. B. lose only the funds they originally invested in their company. C. lose only the total value of the assets actually used to operate the business. D. avoid any liability for these debts since a partnership is considered to be a business entity that is separate and distinct from the partners who own it. 46. Ain) _ is a state-chartered legal entity with authority to act and to have liability separate from its owners. A. limited partnership B. conventional corporation C. unlimited partnership D. nonprofit organization 47. An owner of a corporation is known as a(n): A. general partner. B. limited partner. C. director D. stockholder. 48. Which of the following statements about the operation of a corporation is correct? A. A corporation receives its charter from a state government. B. A corporate charter automatically expires in 99 years and must be renewed if the corporation wants to remain in business. C. Owners of a corporation have unlimited liability for any claims against their company D. A corporation tends to be much easier to set up than a sole proprietorship or partnership. 49. Compared to partnerships and sole proprietorships, a major advantage of the C (conventional) corporation as a form of business ownership is that it A. has the ability to raise more money. B. is easier and less expensive to form. C. qualifies for simplified tax treatment. D. creates unlimited liability for its owners. 50. An evaluation of franchising would conclude that this type of arrangement: A. has become the dominant form of business organization in the United States because it has many advantages and almost no disadvantages B. appeals to people who want to own a business, but are not comfortable starting a company from scratch. C. has a much higher risk of failure than independent companies. D. has little chance of success outside the United States because many foreign countries do not allow such arrangements. 51. Daggie's Sandwiches, Inc., sells the rights to use its name and sell its sandwiches in a given market area to aspiring businesspeople who are willing to pay agreed-upon fees and meet certain contractual terms. Daggie's: A. is offering investors the opportunity to form limited partnerships. B. is a franchisor. C. creates private subsidiary companies. D. offers a tax-free investment potential. 52. A prospective franchise owner wants to keep his monthly costs at a minimum. The franchisor he is reviewing is advertising that royalty payments of 8% of sales could be as high as $250,000 per month. The franchisor is claiming that a franchisee can expect monthly sales to be as high as: A. $2,125,000 B. $2,000,000 C. $3,125,000 D. $200,000