The principal-agent problem refers to the fact that the agent's goals:
A. coincide with those of the principal.
B. do not overlap with those of the principal.
C. do not always coincide with those of the principal.
D. overlap with those of the principal.
Answer: C
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An increase in uncertainty about the future will tend to ________ precautionary saving and ________ the desired level of wealth for households
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
If designed correctly, tournaments
A. always reward a single winner. B. reduce the applicant pool to just those workers with the best degrees. C. discourage competition. D. reward players according to their ranked productivity. E. elicit equal effort from all workers.
Assume that labor is the only variable input and that the payment made to labor is denoted as W. The marginal product of labor can be stated as
A. W/MC. B. (W) × (MC). C. MC/W. D. TC/W.
The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.