The principal-agent problem occurs:
A. when the principal has less information than the agent.
B. when the principal has more information than the agent.
C. when the agent has less information than the principal.
D. not observed in reality.
A. when the principal has less information than the agent.
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Which of the following must decline if there is a reserve deficiency in the banking system?
A) Demand deposits B) Reserves C) Net worth D) The demand deposit multiplier
An intermediate good is
A) always counted when measuring GDP because it doesn't represent time spent in production of a final good or service. B) a good whose value is of neither a high grade nor a low grade. C) a good that is sold to the government and then redistributed to the poor. D) any good that is resold by its purchaser rather than used as is.
Explain the economic rationale behind military alliances. Do new members always strengthen the alliance? Why or why not?
What will be an ideal response?
Assume that you want to invest in Thailand and therefore need to exchange U.S. dollars for Thai baht. You are at the bank and see that, depending on whether you use the bid or the ask rate, you have to pay either $10,000,000 or $11,000,000 to get a certain amount of baht. Which amount is correct?
a. It is not possible to tell without knowing which amount was calculated with which exchange rate. b. It is not possible to tell without knowing the bid and ask rate as well as the desired amount in baht. c. It has to be $10,000,000. d. It has to be $11,000,000. e. It could be either $10,000,000 or $11,000,000