For the firm, the major goal of profit sharing plans is to:
A. force workers to incur some of the business risk.
B. overcome the monopsony problem of having to pay higher wages to attract additional
workers.
C. overcome the principal-agent problem by better aligning the workers' interests with those of
the firm.
D. reduce total compensation payments.
Answer: C
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With no Ricardo-Barro effect, a government budget surplus
A) decreases the demand for loanable funds and increases the real interest rate. B) increases the demand for loanable funds and lowers the real interest rate. C) increases the supply of loanable funds and lowers the real interest rate. D) increases the demand for loanable funds and raises the real interest rate. E) decreases the supply of loanable funds and lowers the real interest rate.
Why do banks create money? Do they create money to help the Federal Reserve control the money supply or is there a more basic reason?
What will be an ideal response?