________ arises when one party to a contract changes behavior in response to that contract, passing the cost of that change in behavior to the other party.
A. Adverse selection
B. Moral hazard
C. Market signaling
D. Logrolling
Answer: B
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Under a fixed exchange rate system, a real interest rate corresponding to the upward-sloping portion of the NCF curve reflects the fact that a central bank ________, and the real interest rate corresponding to the horizontal portion of the NCF curve
reflects the fact that a central bank ________. A) can always supply more domestic currency; can always meet the demand for foreign currency B) can always supply more domestic currency; is limited in meeting the demand for foreign currency C) is limited in meeting the demand for domestic currency; can always meet the demand for foreign currency D) is limited in meeting the demand for domestic currency; is limited in meeting the demand for foreign currency
If a coin is flipped two times, what is the probability of a tail appearing on both tosses?
A) 0.25 B) 0.75 C) 1.0 D) 0.50
Which of the following monetary policy tools was introduced in 2008?
A. The discount rate. B. The federal funds rate. C. Open-market operations. D. Interest on reserves held at the Fed.
A good salesperson can sell $200,000 worth of goods, while a poor one can sell only a smaller amount worth of goods. Job applicants know if they are good or bad, but the firm does not
A firm will offer job applicants a choice between a fixed salary of $20,000 or a 20% commission. Assume risk-neutral salespersons and no opportunistic behavior. Given that the firm wants to distinguish a prospective good salesperson from a poor one, what should be the sales amount of a poor salesperson? A) more than $150,000 B) less than $100,000 C) more than $100,000 D) $100,000