One of the reasons that successful proprietors may be reluctant to borrow money from a bank to expand their business is that
a. expanded businesses generally generate lower rates of profit
b. the bank would become a part owner
c. unlimited liability cramps ambition
d. the bank's liability insurance isn't sufficient to cover expected liabilities
e. issuing stock to finance the expansion is less costly
C
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In response to an increase in the wage rate, the substitution effect will cause a person to
A) supply fewer hours of labor. B) supply more hours of labor. C) supply the same hours of labor. D) have a backward bend in her labor supply curve.
Assume that an economy's real GDP multiplier is 4 . If this economy is in equilibrium at $2,000 billion, then which one of the following actions will bring it to a full-employment equilibrium of $1,500 billion?
a. $500 billion spending cut. b. $500 billion spending increase. c. $125 billion spending cut. d. $125 billion spending increase. e. $2,000 billion spending cut.