The basic factors of production
land, labor, capital, entrepreneurship
When the production of natural goods decrease
Capital goods increase
Machines used to make automobiles are classified as
capital goods
In which type of economy do individual buying decisions in the marketplace together determine what, how and for whom goods and services will be produced
Command
Term that best describes our present economic/political system
Capitalism
Prices are determined by the forces of
supply and demand
Economic growth occurs when a country produces goods and services at
a faster rate than the population is increasing
Is "economics" the body of knowledge that relates to producing and using goods and services to satisfy human wants?
TRUE
Do consumers help decide what will be produced as well as how much will be produced?
TRUE
Does inflation result in a decline in the purchasing power of money
TRUE
New businesses mainly fail because
owners lack financial resources
Which statement is true about successful entrepreneurs
Most successful entrepreneurs learned from their mistakes during unsuccessful startups and started over
To start your own business, you need
adequate funds, a general knowledge about business, some work experience, and a business opportunity
The form of ownership selected depend on
Both a and b
The terms capital, net worth, and equity are
interchangeable and defined as assets less liabilities
If a balance sheet shows cash as $118,000 liabilities as $115,000 and capital as $125,000, how much would the noncash assets be worth
$122,000
Approximately how many businesses are formed as proprietorships
three out of four
Which statement is true about proprietorships
The owner pays less income tax than corporations
If one partner makes a contract that the other partners do not like
all partners are bound by it
The trade name of a business
does not reduce the owners' liability to creditors
Do most businesses start with several owners?
No
Is it typical for months and years to pass before a new business earns a profit
Yes
Do new businesses often fail for financial reasons?
Yes
Do typical entrepreneurs give up quickly when they are not immediately successful?
No
In recent years, have an increasing number of women opened their own buisness
Yes
Is the legal form of ownership one of the first decisions that a new owner must make?
Yes
Does the form of ownership selected depend upon the financial responsibility the owner is willing to assume
Yes
Should the entrepreneur write a business plan soon after launching the business
No
Is the corporation the most common form of ownership
No
Can as few as two people form a sole proprietorship?
No
Does it usually take less time for decisions to be made in a proprietorship than in other forms of business ownership?
Yes
Can a sole proprietor be forced to use personal possessions to pay off debts if the business fails?
Yes
Is a business that provides personal services well suited to the proprietorship form of organization
Yes
Is a partnership limited to a maximum of six partners?
No
Can a partnership usually borrow money more readily than a sole proprietorships
Yes
If one person in a partnership is unable to pay business debts, are all other partners responsible for paying those debts?
Yes
Is it true that a partner can lose only the amount of money invested in the partnership should the business fail
No
If a partner enters into a contract against the wishes of the other partners, the other partners are legally responsible for the contract.
Yes
Can the bankruptcy of any partner cause a sudden end to the partnership
Yes
Must creditors be informed about the formation of a limited partnership?
Yes
Corporations tend to be
few in number and large in size
In a recent year, corporate sales of goods and services were about
Sixteen times more than sales form partnerships
An official document giving power to run a corporation is a
charter
Shareholders of a corporation are often called
owners
Net proceeds refer to the
cash received from the sale of all assets minus the payments of all debts
Unissued shares are the
shares that might be sold and used to expand the business at a later date
Which statement is true about obtaining money in corporations
Corporations can borrow money more easily than can partnerships
People who invest in a corporation are
financially liable up to the amount originally invested
When an owner of a corporation dies
the life of the corporation is not affected
Taxes that are unique to a corporation are
a filing fee, an organization tax, an annual state tax, and a federal income tax
A corporation with taxable earning of $74,000 has a tax rate of 15% on the first $50,000 and a 25% tax rate on the next $25,000. The federal income taxes Will amount to
$13,500
An agreement that involves two or more businesses to provide a good or service is called
A joint venture
virtual corporation
takes advantage of fast-changing market conditions
In order to form a sub chapter s corporation, what is the maximizing number of stockholders that the firm can have
100
Tennessee Valley Authority is an example of
Quasi-public corporation
Although a corporation is owned by a group of people, does it act as if it were a single person?
Yes
Is a corporation allowed to make contacts but not borrow money?
No
Is it possible for a corporation to be sued in its own name
Yes
Can a person who buys only one share of stock become an owner of a corporation
Yes
Is a dividend the amount of money a person pays to buy a share of stock?
No
Can creditors collect from stockholders if the corporation fails?
No
Are the members of the board of directors elected by stockholders?
Yes
Can a corporation make important changes in the purpose of its business without changing its charter
No
When shares are transferred, must the transfer of ownership be indicated in the records of the corporation?
Yes
Is the annual state tax rate for corporations based on profits?
Yes
Is it possible for some corporations to avoid double taxation
Yes
Does a joint venture occur when two major contractors agree to connect two cities by building a tunnel under a river?
Yes
Do virtual corporations tend to be temporary relationships?
Yes
Does a cooperative provide members with both cost and profit advantages that they would not have individually?
Yes
Is a limited liability company taxed as if it were a sole proprietorship or partnership?
Yes
Is a major strength of an LLC its limited liability feature?
Yes
Do large corporations and multinational firms usually qualify as LLCs?
No
Does a nonprofit corporation pay dividends to shareholders?
No
Is a "quasi-public corporation" operated only by state governments?
No
You will receive the greatest gain on your principal if interest is compounded
Daily
A savings account at a credit union is Called a
Share account
Money left over after you laid your bills is
Discretionary income
Which of the following is not a short term need
Child's education
Which of the following is not a long term need
New car
Which of the following is a condition determining how much money you will save
All of these
A stockbroker works for which type of financial institution?
brokerage firm
If liquify is important to you, which of the following savings options would you not want to consider
Certificate of deposit
A method to make regular saving easier is
automatic payroll deduction
The date on which a certificate of deposit is due is called the
maturity date
Short-term needs include things such as home ownership, education of children, and retirement
FALSE
Discretionary income is income you have left to spend after the bills have been paid
TRUE
A regular savings account pays less interest than a certificate of deposit
TRUE
Commercial banks offer only a few banking services and are not competitive
FALSE
A money market fund is insured by the FDIC for a maximum of $250,000
FALSE
convience is a reason why many people choose a financial institution
TRUE
Your goals for saving money will affect your choice of a financial institution
TRUE
Early withdrawal penalties are charges against certificates of deposit for withdrawals prior to maturity
TRUE
Earnings on stock are called
dividends
Which of these statements is true about common stock
each share has voting privileges
Assigning your voting right to someone else is known as a
proxy
How are stocks of well known companies classified
Blue chip
What has an effect on stock value?
the company, interest rates, the market
A market characterized by pessimism is a
bear market
Which of the following is not a stock index
P/E ratio
preffered stock
Carries less risk than common stock
What is the marketplace for OTC stocks?
NASDAQ
Which of the following is not a characteristic of common stockholders
They are paid dividends before holders of any other types of stocks or bonds
a stock that remains stable during declines in the economy
defensive stock
People who buy and sell stocks on the stock exchange
floor brokers
A public corporation stock is traded openly in stock markets
TRUE
Corporations must pay dividends to stockholders regardless of profits
FALSE
Stockholders can lose personal assets when the business fails
FALSE
Growth stocks reinvest profits so the business can grow and expand
TRUE
Most investors consider stock purchases as long-term investments
TRUE
The largest stock exchange in the United States is the American Stock Exchange
FALSE
The New York stock exchange is an auction market where buyers and sellers are brought together
TRUE
With direct investment, stockholders can avoid broker commissions
Tue
TRUE
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