Suppose the probability of an employee being caught shirking, q, is a function of the employer's monitoring, M, such that q = M/100
If workers must put up a $1,000 bond and the gain to each worker from shirking is $100, what is the employer's optimal level of monitoring that is just sufficient to discourage shirking?
Workers are deterred from shirking if q = G/B = 0.10. Ten units of monitoring are necessary to achieve q = 0.10.
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For a commodity to function effectively as money it must be
A) easily standardized, making it easy to ascertain its value. B) difficult to make change. C) deteriorate quickly so that its supply does not become too large. D) hard to carry around.
Thrift institutions encountered serious difficulties in the 1970s because: a. money market mutual funds became serious competitors for their deposits
b. the U.S. Treasury deposited larger sums of money than the thrift institutions could effectively manage. c. the interest rates they had to pay on deposits began to fall. d. each of the largest banks increased the pressure on the thrifts by building a nationwide network of branch banks. e. the FDIC increased the reserve requirement for thrifts.