The principal-agent problem in corporations exists because the managers of a firm
A) may pursue their own goals even when the result is lower profit for owners.
B) may know how to operate the business better than absentee owners do, and yet not be allowed to.
C) are generally unable to do the monitoring that would result in the firm's avoiding moral hazard problems.
D) are generally unable to do the monitoring that would result in the firm's avoiding adverse selection.
E) are generally unable to monitor workers, who do not care about the profits due the managers.
A
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What are the two critical measures of a nation's economic health?
A) sales and taxes B) wages and raises C) income and spending D) production and income
Suppose Gerald works for Lola as a production assistant. Gerald and Lola fall in love, get married and have children. Gerald stops working for Lola in order to care for the children. What will be the effect of this scenario on GDP?
A) GDP will increase. B) GDP will decrease. C) GDP will not change. D) GDP may increase or decrease depending on the rate of inflation.
The data in the table above are the U.S. balance of payments. What is the capital and financial account balance?
A) $0 B) $150 billion C) -$350 billion D) -$150 billion
The purchasing power parity predicts that if US price level falls relative to the Mexico price level, then
a. Dollar value will rise relative to the peso b. Dollar value will fall relative to the peso c. There is no effect on either currency d. PPP predicts price level will normalize in the long-run