If high-level executives of a company award themselves sizable bonuses even though the firm they manage is making losses and performing poorly, this event is most likely to arise because of
a. the law of diminishing marginal returns.
b. competition among business firms for high-level executives.
c. economies of scale.
d. the principal-agent problem.
D
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The change illustrated in the figure above is part of the transmission process of the Fed's monetary policy
As a result of the increase in the supply of loanable funds, in the short run aggregate demand ________, aggregate supply ________, and potential GDP ________. A) increases; does not change; does not change B) increases; increases; increases C) decreases; increases; increases D) increases; decreases; decreases E) decreases; decreases; decreases
The tax elasticity of supply measures the
A. Response of quantity supplied to a change in the tax rate. B. Response of employers to a change in the tax rate. C. Change in the amount of taxes workers must pay when tax rates change. D. Response of workers to a change in prices.
Betty's Bakery bakes fresh bread every morning. Any bread not sold by the end of the day is thrown away. A loaf of bread costs Betty $2.00 to produce, and she prices loaves of bread at $3.50 per loaf. Suppose near the end of one day Betty still has 12 loaves of bread on hand. Which of the following is correct?
a. Betty should only sell the remaining bread for $3.50 per loaf since that is the regular price. b. Betty should only sell the remaining bread for $2.00 per loaf or more since that is what the bread costs to make. c. Betty should be willing to sell the remaining bread for any price above $0 per loaf since she will have to throw it away if she does not sell it for something. d. Betty should just throw the bread away and change the price of her bread starting tomorrow to make sure she sells all of her bread each day.
Suppose Congress institutes an investment tax credit. What would happen in the market for loanable funds?
a. The interest rate and investment would fall. b. The interest rate and investment would rise. c. The interest rate would rise and investment would fall. d. None of the above is necessarily correct.