If a salesperson is paid by the volume of sales he or she makes, then the
A) moral hazard problem is diminished.
B) moral hazard problem is enhanced.
C) adverse selection problem is enhanced.
D) None of the above answers is correct.
A
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Some economists believe that deficit spending can impose a burden on future generations. Which of the following does NOT explain the burden?
A) Investment will be crowded out by an increase in current consumption. B) Deficit spending that is allocated to purchases leads to long-term increases in real GDP. C) Future generations will have a smaller capital stock that will reduce their wealth. D) Future generations will have to be taxed at a higher rate.
The logic of control variables in IV regressions
A) parallels the logic of control variables in OLS B) only applies in the case of homoskedastic errors in the first stage of two stage least squares estimation C) is different in a substantial way from the logic of control variables in OLS since there are two stages in estimation D) implies that the TSLS is efficient