Which of the Following Is Not an Advantage of the Corporate

question 109

Multiple Choice

Which of the following is not an advantage of the corporate structure over proprietorship and partnership forms of business organization?

• A) Stockholders in the corporation have limited liability, whereas proprietors or partners have unlimited liability.
• B) Ownership rights of a corporation may be transferred more easily.
• C) Large investment funds are more easily attracted by the corporation.
• D) Corporations are less likely to suffer from the principal-agent problem.

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Definitions:

Contractionary Monetary Policy

A central banking strategy involving the increase of interest rates or reduction of the money supply to decrease inflation and slow down economic growth.

Short-Run Phillips Curve

A curve illustrating an inverse relationship between the rate of inflation and the rate of unemployment in the short term.

Disinflation

A decrease in the rate of inflation, indicating a slowdown in the rate at which prices for goods and services rise.

Financial Crisis

A situation where financial assets suddenly lose a large part of their nominal value, often leading to bankruptcies, bank failures, and economic downturns.