A Drawback of Separating Ownership from Control by Creating a Firm

question 113

Multiple Choice

A drawback of separating ownership from control by creating a firm is:

• A) the losses of specialization.
• B) increased transaction costs.
• C) the principal-agent problem.
• D) synergies of team production.

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Definitions:

Real GDP

Real GDP, or Gross Domestic Product adjusted for inflation, measures the value of all goods and services produced by an economy in a given period, reflecting the true growth in economic output.

Velocity of Money

The rate at which money circulates or is exchanged in an economy during a specific period.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including currency in circulation and balances held in checking and savings accounts.

Aggregate Demand

The collective appetite for goods and services in an economy, valued at a certain price point during a precise time interval.