Question 1

Discuss the forms of business organizations and how to create/terminate them.

• Discuss the factors to consider when selecting a business's organizational form.
• Explain a trend and the main reason for boards of directors and shareholders becoming more active in the operations of publicly held corporations.
• Discuss any of your own experiences as sole proprietors (or partners in a partnership). Feel free to discuss the advantages and disadvantages of this form of business. Try to answer the following situations:

1. Four friends jointly own a summer cottage and use it solely for their personal enjoyment. Is this a partnership? Please explain why or why not?
2. What if the four friends rent the cottage to other people for part of the year?
3. Suppose a renter dies in the cottage due to a gas leak. Would all of the owners be liable? Please explain why or why not?

Question 2

This week's City Council Scenario:Assume you are the economist for your local government. Your choices to increase spending in order to solve the declining GDP and rising unemployment have left you withhigher inflation.

• Explain what it means to have higher inflation.
• Assess how inflationaffects the people in the community.
• Contrast how inflation affects banks (lenders) versus borrowers in your region. Is there abright side to inflation?