Explain why checks on principals might be necessary
What will be an ideal response?
Without checks, the employer (principal) might have the ability of exploiting an employee (agent) by claiming that he/she did not put forth the effort agreed upon, or by falsely reporting information such as profits. Since payments are made after work is completed it potentially puts the employee in a bad bargaining position. An inefficient contract might eliminate/mitigate such behavior.
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Which of the following may NOT serve as a possible chain reaction for either fiscal or monetary policy?
A) G? ? Y? ? C? ? Y? ? C?.... B) T? ? Y? ? C? ? Y? ? C?.... C) M? ? i? ? I? ? Y? ? C?.... D) M? ? i? ? I? ? Y? ? C?....
If businesses become very pessimistic and reduce spending, which of the following is the most likely in the short run?
a. An increase in output, an increase in money demand and an increase in the interest rate. b. A decrease in output, an increase in money demand and an increase in the interest rate. c. A decrease in output, a decrease in money demand and a decrease in the interest rate. d. An increase in output, a decrease in money demand and a decrease in the interest rate. e. A decrease in output, a decrease in money demand and an increase in the interest rate.