Which of the Following Statements Is Correct

question 97

Multiple Choice

Which of the following statements is correct?

• A)A hostile takeover is the primary method of transferring ownership interest in a corporation.
• B)The corporation is a legal entity created by the state and is a direct extension of the legal status of its owners and managers, that is, the owners and managers are the corporation.
• C)Unlimited liability and limited life are two key advantages of the corporate form over other forms of business organization.
• D)In part due to limited liability and ease of ownership transfer, corporations have less trouble raising money in financial markets than other organizational forms.
• E)Although stockholders of the corporation are insulated by limited legal liability, the legal status of the corporation does not protect the firm's managers in the same way.

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Definitions:

Multiplier

An economic factor that quantifies the effect of a change in fiscal or monetary policy on the overall economy, such as how an increase in government spending can lead to a larger increase in national income.

Crowding out

A situation where increased government spending leads to reduced investment in the private sector due to higher interest rates or competition for resources.

Government Purchases

Expenditures by government entities on goods and services that are used to provide public services or to benefit the country's economy.

Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulation of the banking industry, and stability of the financial system.