A regulation that sets the lowest price at which it is legal to trade a good is a
A) search ceiling.
B) price floor.
C) production ceiling.
D) price ceiling.
E) subsidy.
B
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A downturn in business confidence may cause a ________ in j, and an ________ of the true user cost of capital, both depressing investment
A) rise, overestimate B) rise, underestimate C) fall, overestimate D) fall, underestimate
The term quantity supplied refers to the quantities of a good that sellers are willing and able to sell at all prices
a. True b. False Indicate whether the statement is true or false
Suppose we have an economy in which G = 100, t = 0.26, Y = 3800, and YN = 4000. Then t rises to 0.28 as the same time as G rises to 1150. The overall impact of this resettling of the fiscal variables is ________ because ________
A) expansionary, the actual deficit rises B) expansionary, the natural employment deficit falls C) contractionary, the natural employment deficit falls D) contractionary, the natural employment deficit rises E) contractionary, the actual deficit rises
A executive can either slack (effort e = 0) or work hard (e = 1) on behalf of shareholders. If she slacks, the firm earns a gross return of 1,000 for sure. If she works hard, there is an even chance of the gross return being 10,000 or 80,000 . Her overall utility equals her utility from wage income (of the form w1/2, where w is the wage) minus the disutility of work (simply d), or in other words
U = w1/2 – d. If she slacks, she experiences no disutility of work (d = 0) but if she works hard, the disutility of work is d = 50 . Assume that U = 0 in her next best available job. What is the optimal wage contract that shareholders would offer if they can observe the effort of the executive? a. A flat wage w = 0 and no requirement to work hard. b. A flat wage w = 50 and a requirement to work hard. c. A flat wage w = 2,500 and a requirement to work hard. d. A share of 50% of the profits and a requirement to work hard.