In the case of a moral-hazard problem, which of the following is not a way for the principal to encourage the agent to act more responsibly? The principal could
a. better monitor the agent.
b. pay the agent above-equilibrium wages.
c. delay payment to the agent.
d. stop paying bonuses.
d
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Use the following graph to answer the next question.
If the federal funds market is at equilibrium at point C and the Federal Reserve decides to conduct an open-market sale, then it must be trying to set a ________.
A. lower target federal funds rate by increasing the amount of reserves in the market B. higher target federal funds rate by increasing the amount of reserves in the market C. higher target federal funds rate by reducing the amount of reserves in the market D. lower target federal funds rate by reducing the amount of reserves in the market
The Department of Education noticed that for loans granted to students without any strings, the average grade point average of the students decreases dramatically over time, while the students whose loans renew only if they pass their courses tends to stay stable. This could be due to a
a. Adverse selection problem b. Moral hazard problem c. Typical college life phenomenon d. None of the above
?
Macro AD-AS Model
In Exhibit 14A-4, the level of real GDP represented by Yp:
A. would be associated with considerable unemployment. B. indicates that the economy is experiencing zero inflation. C. indicates the short-run equilibrium level of real GDP. D. is potential real GDP for this economy.
When aggregate expenditure is greater than aggregate output, there will be an unplanned build up of inventories.
Answer the following statement true (T) or false (F)