The problem the agent faces when deciding how to keep the agent motivated is called
a. Adverse selection
b. Moral hazard
c. Both of the above
d. None of the above
b
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Which of the following is not a function of prices in a market system?
a. Prices have the crucial job of balancing supply and demand. b. Prices send signals to buyers and sellers to help them make rational economic decisions. c. Prices coordinate economic activity. d. Prices ensure an equal distribution of goods and services among consumers.
All else constant, an increase in the supply of money will lead to _______
A) an increase in the equilibrium quantity of money and an increase in the equilibrium price of bonds. B) an increase in the equilibrium quantity of money and a decrease in the equilibrium price of bonds. C) a decrease in the equilibrium quantity of money and an increase in the equilibrium price of bonds. D) a decrease in the equilibrium quantity of money and a decrease in the equilibrium price of bonds.
An open market sale of bonds by the Federal Reserve will lead to an increase of reserves in banks.
Answer the following statement true (T) or false (F)
As more workers are hired, the marginal physical product of labor eventually declines because
A) less efficient workers are hired as the number of workers increases. B) workers do not work well together when the number of workers increases. C) the amount of capital each worker has to work with declines as the number of workers increases. D) of diseconomies of scale.