Suppose the marginal propensity to consume (MPC) equals 0.80, an increase in autonomous investment of $100 will lead to an increase in real Gross Domestic Product (GDP) by

Agency problems appear in many settings within a firm. All of the following are examples, except which is NOT a good example of this problem?

a. Diversified stockholders are more enthusiastic on accepting business risks than are firm managers. b. Firm managers receive cash bonuses based on the performance of the firm. c. Employees sometime take items from the store in which they work. d. Lenders to firms want the managers to invest in safe projects to protect their collateral in the project but managers want to invest in projects that will make a name for them and warrant promotion. e. Firm managers sometime want to relax on the job.

Which of the following is correct?

a. Although levels of real GDP per person vary substantially from country to country, the growth rate of real GDP per person is similar across countries. b. Productivity is not closely linked to government policies. c. The level of real GDP per person is a good gauge of economic prosperity, and the growth rate of real GDP per person is a good gauge of economic progress. d. Productivity may be measured by the growth rate of real GDP per person.