Suppose the plant owners design an incentive scheme for the plant manager in which the feasible production level is set equal to output from the previous quarter. The bonus payment is determined by the formula B = 0.2Qf + 0.2(Q - Qf)
What potential problems can arise with this scheme? A) If Qf is unusually large, then the manager has little incentive to work hard during the following quarter because Q will likely fall back below Qf.
B) If Qf is unusually small, then the manager will receive a small bonus regardless of their efforts during the current quarter.
C) The manager has an incentive to underperform and generate a small Q during the current quarter in order to provide a smaller benchmark for performance in the next quarter.
D) The incentive scheme only depends on current output and does not measure performance relative to feasible production.
D
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In the Solow model, if k = 8, y = 24, and s = 0.25, what is c?
A) 24 B) 20 C) 18 D) 12
Among all assets, only money can be a
A) unit of account. B) store of value. C) medium of exchange. D) a way of amassing wealth.
When numerous Japanese companies buy $100,000,000 worth of goods or services from U.S. producers, ceteris paribus, there will be
A) appreciation in the value of the yen against the dollar. B) depreciation in the value of the yen against the dollar. C) depreciation of the dollar against the yen. D) no change in values of the currencies.
Feature(s) of the Asian model
a. high rate of capital formation b. open economy c. export orientation d. high domestic saving e. all of the above