Tying salaries of top managers to the profits of the firm is a way to reduce the effect of the principal-agent problem
Indicate whether the statement is true or false
TRUE
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Liquidity provision and asset purchase may not be enough to stimulate the economy unless the these policy actions are able to
A) lower the real interest rate for investments. B) lower the short-term real interest rate. C) raise the policy rate above zero. D) lower the policy rate.
The double taxation of capital gains can be justified _____
a. on the ability-to-pay principle b. on efficiency grounds c. on the grounds that government needs more revenue d. on the benefit principle
Refer to the above figure. Suppose E is the original equilibrium. An increase in the U.S. demand for Japanese-made goods will lead to
A) a depreciation of the yen and an increase in the quantity of yen sold per week. B) a depreciation of the yen and a decrease in the quantity of yen sold per week. C) an appreciation of the yen and an increase in the quantity of yen sold per week. D) an appreciation of the yen and a decrease in the quantity of yen sold per week.
In a market economy, income is primarily determined by
a. the productivity of household resources b. the level of transfer payments c. government monetary and fiscal policy d. the geographic distribution of resources e. the amount of financial assets owned by households