An advantage of proprietorships is
A) the ease with which they can be formed and dissolved.
B) their ability to raise large amounts of equity capital.
C) the fact that their profits are not taxed.
D) the breadth of management expertise that comes from having a board of directors.
Answer: A
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In Monetarist theory, the demand to hold money is:
a. The same as the demand to borrow real loanable funds. b. Upward sloping because as the real risk-free interest rate rises, people want to hold more money. c. Rather unstable because it changes greatly with movements in the real risk-free interest rate. d. Neutral, in the sense that it is independent from all macroeconomic variables. e. Rather stable and does not change greatly with movements in the real risk-free interest rate.
Answer the following statements true (T) or false (F)
1. In real-business-cycle theory, real output can change without a change in the price level. 2. A coordination failure is said to occur when people do not reach a mutually beneficial equilibrium because they lack some way to jointly coordinate their actions to achieve it. 3. New classical economists see the economy as incapable of self-correction when disturbed and pushed away from its full-employment level of real output. 4. Rational expectations theory assumes that both product and resource markets are competitive and that wages and prices are flexible. 5. In rational expectations theory, a fully anticipated change in aggregate demand or in the price level results in no change in real output.