As it relates to corporations, the principal-agent problem is that:
A. the goals of the corporate managers (the principals) may not match the goals of the
corporate owners (the agents).
B. the goals of the corporate managers (the agents) may not match the goals of the corporate
owners (the principals).
C. the federal government (the agent) taxes both corporate profits and the dividends paid to
stockholders (the principals).
D. it is costly for the corporate owners (the principals) to obtain a corporate charter from
government (the agent).
Answer: B
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When the federal government makes no attempt to take corrective action, markets return a recessed economy to full employment levels of production by
(a) laying off workers. (b) lowering wages. (c) dropping prices. (d) doing all of the above.
The consumption function expresses the:
a. relation between consumption and dissaving. b. relation between consumption and disposable personal income. c. purposes of consumption. d. relation between consumption and dissaving.