Which of the following is correct regarding the small-business sector in the United States?

• A. Small businesses rarely contribute to innovation in the economy.
• B. Small businesses account for less than 1% of all U.S. firms.
• C. Small businesses employ a significant portion of the U.S. workforce.
• D. Small businesses are not affected by changes in government policy.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the role of small businesses in the U.S. economy by reviewing key economic contributions such as employment, innovation, and firm prevalence.
2. Step 2: Recall that small businesses are known to employ a large portion of the U.S. workforce, which means they play a significant role in job creation and employment levels.
3. Step 3: Recognize that small businesses often contribute to innovation, contrary to the statement that they rarely do, as many startups and small firms drive new ideas and technologies.
4. Step 4: Know that small businesses make up a substantial percentage of all U.S. firms, far exceeding 1%, so the claim about less than 1% is incorrect.
5. Step 5: Understand that small businesses are affected by government policies such as taxes, regulations, and subsidies, so the statement that they are not affected by changes in government policy is false.