Most college professors are granted tenure after six years of employment. Tenure implies a lifetime appointment. What problem does this situation create, and how can colleges minimize the problem?
What will be an ideal response?
Receiving a lifetime appointment creates a moral hazard. Knowing that one cannot be fired creates an incentive to shirk work. Colleges minimize the problem by looking for signals such as publications and an ongoing commitment to one's discipline during the six year probation period with the belief that those who work hard for these six years are also likely to work hard throughout the future.
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A negative income tax does not
A. increase work incentives for those who receive cash payments. B. increase work incentives for those who do not receive cash payments. C. affect incentives for the poor but affects incentives for low earners who are not poor. D. affect incentives, which is why it is efficient.
The average level of one's expected future income stream is
A. taxable income. B. gross income. C. permanent income. D. disposable income.
The question of whether economic growth is desirable is a positive question, easily settled by economic analysis
Indicate whether the statement is true or false
In an economy in which velocity is constant and real output grows at an average rate of 4 percent per year, a 4 percent average rate of growth in the money supply would result in: a. a constant price level
b. a slowly increasing price level. c. a rapidly increasing price level. d. constant real GDP. e. constant nominal GDP.