The principal-agent problem:
A. is when the principal has more information than the agent.
B. is when the principal and agent have the same objectives.
C. is when the agent is tempted to put in more effort than the principal would like.
D. is commonly seen in the employer-employee relationship.
Answer: D
You might also like to view...
Based on the model of the money market, if prices in the economy decrease, the equilibrium interest rate should
A) stay the same. B) increase. C) decrease. D) increase to the same extent that the supply of money increases.
If the government seizes Lucy's property and resells it to Ethel,
A) Lucy and Ethel collectively capture the resulting gains. B) Lucy captures the resulting gains. C) Ethel captures the resulting gains. D) Neither Lucy nor Ethel capture any resulting gains.
Situation 35-2 ? Dan and Ann live in the same community and both can participate in two activities, producing and stealing. Refer to Situation 35-2. Ann spends 8 hours of each day producing and 1 hour of each day stealing. It is probably the case for her that
A. at some point the MB/MC ratio for producing fell below the MB/MC ratio for stealing. B. her MB/MC ratio for producing was always greater than her MB/MC ratio for stealing. C. her MB/MC ratio for producing never changed, no matter how much or how little she produced. D. her MB/MC ratio for stealing never changed, no matter how much or how little she stole. E. There is not enough information to answer the question.
Because of securitization, a new class of residential mortgages offered to borrowers with less-than-stellar credit records developed. These mortgages are known as
A) risk-enhanced mortgages. B) subprime mortgages. C) bundled mortgages. D) adjustable-rate mortgages.