As the probability of detecting shirking increases, the size of the bond necessary to deter shirking
A) also increases.
B) stays the same.
C) decreases.
D) increases at an exponential rate.
C
You might also like to view...
Goods are ________ when the income elasticity of demand is less than zero
A) substitutes B) complements C) inferior D) elastic E) normal
A key difference between small-denomination and large-denomination time deposits is that
A) small-denomination time deposits pay no interest. B) large-denomination time deposits may be bought and sold on secondary markets. C) large-denomination time deposits carry a significant penalty for early withdrawal. D) small-denomination time deposits carry a significant penalty for early withdrawal.
Suppose the president of a textbook publisher argues that a 10 percent increase in the price of textbooks will raise total revenue for the publisher. It can be concluded that the company president thinks that demand for textbooks is:
A. unitary elastic. B. inelastic. C. elastic. D. perfectly inelastic.
The objective of bank management is to
A. maximize stockholders’ profits by making risky investments and giving loans to borrowers who will pay the highest interest rates. B. refuse to make risky loans and make loans only to the safest borrowers. C. invest in the U.S. government securities and make loans only to established businesses. D. strike the appropriate balance between the attraction of bank profits and the need for bank safety.