Which of the following is true?
a. Incentive compensation imposes no risks on the agents and thus should not affect their compensation
b. Incentive compensation imposes risk on the agent but need not be compensated for
c. Incentive compensation imposes risk on the agent for which they should be compensated
d. Incentive compensation is a bad idea
c
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
Following an expansionary monetary policy, we would expect lower interest rates, dollar
A. depreciation, and an increase in the current account deficit. B. depreciation, and a decrease in the current account deficit. C. appreciation, and an increase in the current account deficit. D. appreciation, and a decrease in the current account deficit.
The difference between moral hazard and adverse selection is that moral hazard is about:
A. actions that arise after the parties enter an agreement B. unobserved characteristics of people occurring before parties enter into an agreement. C. never happens when adverse selection is a problem. D. None of these statements is true.
Suppose that Canada decides to peg its dollar ($C, or the loonie) to the U.S. dollar at an exchange rate of $C1 = $US1. Will there be pressure for the Canadian dollar to change in value against the U.S. dollar as a result of the leftward shift of the U.S. IS curve?
A) Yes, the value will appreciate. B) Yes, the value will depreciate. C) No, the value will not change in value. D) Yes, but that pressure will be offset.