the principal-agent problem
What will be an ideal response?
occurs when the principal cannot observe the effort of the agent
problem : principal can't determine whether a bad outcome was because of the agent or bad luck
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A perfectly competitive firm's marginal cost exceeds its marginal revenue at its current output. To increase its profit, the firm will
A) lower its price. B) raise its price. C) decrease its output. D) increase its output.
Of the following, who would most likely be hurt by an unanticipated increase in the rate of inflation?
a. an individual with a 30-year fixed-rate home mortgage loan b. the U.S. federal government because it has a large quantity of outstanding debt c. lenders who have made long-term loans at fixed interest rates d. Social Security recipients whose benefits are adjusted upward as the general level of prices increases
If Congress suddenly passes legislation that required all U.S. workers to receive the same annual pay, we would expect
a. a surplus of workers to fill the easy, desirable jobs. b. less human capital investment. c. all of the above. d. a shortage of workers to fill the least desirable jobs.
If aggregate demand shifts inward over a long period of time, with aggregate supply held constant, the economy should experience
A. unemployment. B. budget surpluses. C. stagflation. D. inflation.