Much of the outcry in the 2008 fight over a fat bailout for Wall Street focused on the size of Wall Street's fat paychecks
The real problem, according to corporate governance researchers, isn't the amount executives receive, it's how companies pay them. Most companies link compensation to quarterly performance, encouraging short-term gambles. One way to align pay with long-term incentives and discourage risky bets would be to stretch compensation over more years. What is a suggested solution to the principal-agent problem? A) employee ownership
B) employee incentive pay
C) employee long-term contracts
D) employee monitoring
C
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The incentive for managers of a government-operated firm (for example, a state university or the U.S. Post Office) to operate efficiently will be
a. low because all government workers are lazy. b. low because there are no residual claimants to monitor and institute cost-reducing measures. c. high because government employees and officials will be less concerned with personal gain. d. high because voters can easily detect those who are to blame for inefficiencies and replace them.
In a fractional reserve banking system
A. commercial banks are required to hold savings account in other banks as reserves against their deposits. B. commercial banks are required to hold a certain fraction of their deposits in reserves. C. all deposits must be held in reserves. D. commercial banks hold no deposits in reserve.
The most prestigious stock market in the world is the
A. New York Stock Exchange. B. London Stock Exchange. C. Tokyo Stock Exchange. D. Chicago Mercantile Exchange.
A variable that RBC theory is simply not interested in and seldom attempts to explain or predict is
A) employment. B) the real interest rate. C) the real wage rate. D) the price level.