Chapter 16 on "Financial System Design" calls the asymmetric information problem discussed in earlier chapters the __________ conflict
A) manager-stockholder
B) stockholder-lender
C) manager-lender
D) profit-risk
B
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If the marginal profit of the next unit is negative, the firm should produce more output in order to generate greater profit.
Answer the following statement true (T) or false (F)
Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
Just like a monopolist, a monopolistically competitive firm:
A. cannot sell additional units of output without lowering the price. B. is a price taker. C. sets the price according to marginal revenue and marginal cost; the demand curve doesn't matter. D. faces a perfectly elastic demand curve.
What is the difference between the federal budget deficit and the national debt?