In Chapter 2, the Idea That Society, Particularly the Economic

question 14

Multiple Choice

In Chapter 2, the idea that society, particularly the economic landscape, has genuinely shifted in a number of crucial areas, and that the entrepreneurial economy is a reaction or answer to these changes is discussed. Which four of the following alternatives are some of the factors driving us towards an entrepreneurial economy?

• A) an increasingly knowledge-based economy
• B) stock markets are increasingly volatile
• C) globalization increases competition
• D) sustainability issues play more of a central role
• E) customers refuse standardized products/services
• F) wage adjustments lean towards more knowledge-based ways of working
• G) technological advancements reduce the need to produce economies of scale

Describe capital gains and how they are treated in terms of taxation.

Differentiate between tax avoidance and tax evasion, including their legal implications.

Understand the concept of exclusions in the context of gross income.

Identify the effects of recent tax legislation on tax filing procedures.

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Definitions:

Operating Leverage

Operating leverage is a measure of how revenue growth translates into growth in operating income, indicating the extent to which a company can increase its profits by increasing sales.

Modigliani-Miller Model

A foundational financial theory proposing that the market value of a company is determined by its earning power and risk of its underlying assets, and is independent of the way it chooses to finance its investments or distribute dividends.

Restructuring

The process of reorganizing a company's structure, operations, or debt to improve efficiency or manage financial challenges.

Tax Effect

The impact of taxation on business decisions, investments, and net income, considering both current and future taxes.