Question 1

Which type of businesses earns the majority of revenues in the United States?

Accepted Answer

A) corporations 
B) partnerships 
C) sole proprietorships 
D) none of these 
A) corporations 
B) partnerships 
C) sole proprietorships 
D) none of these A

Question 2

How are corporate profits taxed in the United States?

Accepted Answer

A) Earnings are taxed first by state sales taxes and then as corporate profits at the Federal level. 
B) Earnings are taxed first as personal income then as corporate profits at the Federal level. 
C) Earnings are taxed first as corporate profits then as personal income after dividends are paid. 
D) Corporate profits are not taxed at all. 
A) Earnings are taxed first by state sales taxes and then as corporate profits at the Federal level. 
B) Earnings are taxed first as personal income then as corporate profits at the Federal level. 
C) Earnings are taxed first as corporate profits then as personal income after dividends are paid. 
D) Corporate profits are not taxed at all. C

Question 3

Define a partnership.

Accepted Answer

A partnership is a firm owned jointly by two or more persons and is not organized as a corporation.

Question 4

The difference between a firm's assets and liabilities is its

Accepted Answer

A) accounting profit. 
B) economic profit. 
C) net worth. 
D) implicit costs. 
A) accounting profit. 
B) economic profit. 
C) net worth. 
D) implicit costs.

Question 5

What are the advantages of setting up a proprietorship or partnership as opposed to a corporation?

Accepted Answer

Ease of fo

Question 6

All of the following represent differences between stocks and bonds except

Accepted Answer

A) a stock can possibly pay dividends forever, but bonds have a fixed number of payments. 
B) differences of opinion about a stock's future may vary considerably but there is less difference about a bond's future. 
C) the future growth of a stock is more uncertain than the payments of a bond. 
D) bonds represent partial ownership in a firm but stocks do not. 
A) a stock can possibly pay dividends forever, but bonds have a fixed number of payments. 
B) differences of opinion about a stock's future may vary considerably but there is less difference about a bond's future. 
C) the future growth of a stock is more uncertain than the payments of a bond. 
D) bonds represent partial ownership in a firm but stocks do not.

Question 7

How do the owners of a partnership relate to the business?

Accepted Answer

A) The owners and the business are not separate legal entities. 
B) The owners and the business are separate legal entities. 
C) The assets of the owners are considered separate from the asset of the business. 
D) None of these describe the legal relationship of the owners to the business. 
A) The owners and the business are not separate legal entities. 
B) The owners and the business are separate legal entities. 
C) The assets of the owners are considered separate from the asset of the business. 
D) None of these describe the legal relationship of the owners to the business.

Question 8

A corporation's board of directors

Accepted Answer

A) hire the managers of the corporation. 
B) control the day-to-day activities of the corporation. 
C) are personally liable for the debts of the corporation. 
D) are the sole owners of the corporation. 
A) hire the managers of the corporation. 
B) control the day-to-day activities of the corporation. 
C) are personally liable for the debts of the corporation. 
D) are the sole owners of the corporation.

Question 9

The present value of $300 received 5 years in the future would be calculated as which of the following when the interest rate is 5%?

Accepted Answer

A) 300/(1.5)⁵ 
B) 300/(1.05)⁵ 
C) 300 × 1.5 × 5 
D) 5.05/300 
A) 300/(1.5)⁵ 
B) 300/(1.05)⁵ 
C) 300 × 1.5 × 5 
D) 5.05/300

Question 10

The Sarbanes-Oxley Act of 2002 requires that CEOs personally certify the accuracy of financial reports.

Accepted Answer

A) True 
 B)False

Question 11

In the United States, corporate profits are taxed

Accepted Answer

A) only at the corporate level. 
B) only when investors receive dividends. 
C) at both the corporate level and when investors receive dividends. 
D) neither at the corporate level nor when investors receive dividends. 
A) only at the corporate level. 
B) only when investors receive dividends. 
C) at both the corporate level and when investors receive dividends. 
D) neither at the corporate level nor when investors receive dividends.

Question 12

What is the primary difference between a sole proprietorship and a partnership?

Accepted Answer

A) Proprietorships have unlimited liability while partnerships have limited liability. 
B) Partnerships can issue stocks and bonds while proprietorships cannot. 
C) Partnerships have more owners than do proprietorships. 
D) There is no real difference between the two types of firms. 
A) Proprietorships have unlimited liability while partnerships have limited liability. 
B) Partnerships can issue stocks and bonds while proprietorships cannot. 
C) Partnerships have more owners than do proprietorships. 
D) There is no real difference between the two types of firms.

Question 13

One of the most widely followed stock indexes in the United States is the Dow Jones Industrial Average.This index represents

Accepted Answer

A) the stock prices of 500 large U.S. firms. 
B) an over-the-counter market. 
C) the stock prices of more than 4,000 U.S. firms. 
D) the stock prices of 30 large U.S. corporations. 
A) the stock prices of 500 large U.S. firms. 
B) an over-the-counter market. 
C) the stock prices of more than 4,000 U.S. firms. 
D) the stock prices of 30 large U.S. corporations.

Question 14

Why is a dollar today more valuable than a dollar a year from now?

Accepted Answer

A) The dollar today can be immediately used to buy something. 
B) A dollar a year from now will likely have less purchasing power because of inflation. 
C) The unknown future is riskier than the known present. 
D) all of the above 
A) The dollar today can be immediately used to buy something. 
B) A dollar a year from now will likely have less purchasing power because of inflation. 
C) The unknown future is riskier than the known present. 
D) all of the above

Question 15

Who is the seller in a primary market and who is the seller in a secondary market?

Accepted Answer

The corporation issuing a bond

Question 16

What is the central role of financial intermediaries in a market economy?

Accepted Answer

A) the creation and printing of money 
B) keeping the price level stable 
C) bringing together savers and borrowers 
D) providing safe deposit boxes for people and businesses 
A) the creation and printing of money 
B) keeping the price level stable 
C) bringing together savers and borrowers 
D) providing safe deposit boxes for people and businesses

Question 17

How has organizing a typical firm in a market economy changed over the last century?

Accepted Answer

A) It has become easier as more and more firms discover how to do it. 
B) As government intervention has decreased, firms now have more freedom. 
C) There has been no change one way or the other over the last century. 
D) It has become more difficult to efficiently organize production. 
A) It has become easier as more and more firms discover how to do it. 
B) As government intervention has decreased, firms now have more freedom. 
C) There has been no change one way or the other over the last century. 
D) It has become more difficult to efficiently organize production.

Question 18

Sole proprietorships are ________ type of business.

Accepted Answer

A) the most profitable 
B) the least common 
C) the most common 
D) the least risky 
A) the most profitable 
B) the least common 
C) the most common 
D) the least risky

Question 19

During 2007, many "subprime" and "Alt-A" borrowers began to default on their mortgages.Describe "subprime" and "Alt-A" borrowers.

Accepted Answer

"Subprime" borrowers are borrowers whose

Question 20

Which of the following is an advantage of starting a new business as a sole proprietorship?

Accepted Answer

A) The owner has limited personal liability. 
B) A sole proprietorship has few government rules and regulations to comply with. 
C) Business profits are not taxed. 
D) A sole proprietorship can easily attain additional funding. 
A) The owner has limited personal liability. 
B) A sole proprietorship has few government rules and regulations to comply with. 
C) Business profits are not taxed. 
D) A sole proprietorship can easily attain additional funding.

Which type of businesses earns the majority of revenues in the United States?

How are corporate profits taxed in the United States?

Define a partnership.

The difference between a firm's assets and liabilities is its

What are the advantages of setting up a proprietorship or partnership as opposed to a corporation?

All of the following represent differences between stocks and bonds except

How do the owners of a partnership relate to the business?

A corporation's board of directors

The present value of $300 received 5 years in the future would be calculated as which of the following when the interest rate is 5%?

The Sarbanes-Oxley Act of 2002 requires that CEOs personally certify the accuracy of financial reports.

In the United States, corporate profits are taxed

What is the primary difference between a sole proprietorship and a partnership?

One of the most widely followed stock indexes in the United States is the Dow Jones Industrial Average.This index represents

Why is a dollar today more valuable than a dollar a year from now?

Who is the seller in a primary market and who is the seller in a secondary market?

What is the central role of financial intermediaries in a market economy?

How has organizing a typical firm in a market economy changed over the last century?

Sole proprietorships are ________ type of business.

During 2007, many "subprime" and "Alt-A" borrowers began to default on their mortgages.Describe "subprime" and "Alt-A" borrowers.

Which of the following is an advantage of starting a new business as a sole proprietorship?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Exam 8: Firms, the Stock Market, and Corporate Governance

Which type of businesses earns the majority of revenues in the United States?

How are corporate profits taxed in the United States?

Define a partnership.

The difference between a firm's assets and liabilities is its

What are the advantages of setting up a proprietorship or partnership as opposed to a corporation?

All of the following represent differences between stocks and bonds except

How do the owners of a partnership relate to the business?

A corporation's board of directors

The present value of $300 received 5 years in the future would be calculated as which of the following when the interest rate is 5%?

The Sarbanes-Oxley Act of 2002 requires that CEOs personally certify the accuracy of financial reports.

In the United States, corporate profits are taxed

What is the primary difference between a sole proprietorship and a partnership?

One of the most widely followed stock indexes in the United States is the Dow Jones Industrial Average.This index represents

Why is a dollar today more valuable than a dollar a year from now?

Who is the seller in a primary market and who is the seller in a secondary market?

What is the central role of financial intermediaries in a market economy?

How has organizing a typical firm in a market economy changed over the last century?

Sole proprietorships are ________ type of business.

During 2007, many "subprime" and "Alt-A" borrowers began to default on their mortgages.Describe "subprime" and "Alt-A" borrowers.

Which of the following is an advantage of starting a new business as a sole proprietorship?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters