A marginal adjustment only refers to a minor change
a. True
b. False
B
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How can a corporation's board of directors and its managers try to reduce the principal-agent problem?
What will be an ideal response?
Transaction costs can be defined as the costs:
A. incurred by buyer and seller in agreeing to and executing a sale of goods or services. B. the government must pay to allow for an exchange. C. incurred by the buyer and seller in agreeing to and executing a purchase of goods or services, excluding transportation costs. D. the government incur to create a structured market for the exchange of buyers and sellers.
One of the major purposes of reserve requirements is to provide:
a. Sources of foreign exchange. b. Sources of foreign investment funds. c. Cash flow for business firms. d. Monetary authorities with a means of regulating the lending ability of banks. e. Banks with the means to make loans.
A firm invests in a new machine that costs $5,000 a year but is expected to produce an increase in total revenue of $5,200 a year. The current real rate of interest is 7%. The firm should
A. undertake the investment, because the expected rate of return of 10% is greater than the real rate of interest. B. not undertake the investment, because the expected rate of return of 4% is less than the real rate of interest. C. not undertake the investment, because the expected rate of return of 6% is less than the real rate of interest. D. undertake the investment, because the expected rate of return of 8% is greater than the real rate of interest.