A principal-agent problem arises in the situation in Scenario 17.5 because
A) the principal can measure effort and output; the agent can measure only output.
B) the principal can measure only effort, and the agent can measure only output.
C) the principal can measure only output, and the agent can measure effort and output.
D) neither the principal nor the agent can measure effort.
E) neither the principal nor the agent can measure output.
C
You might also like to view...
To "cure" their balance of payments deficits without altering exchange rates, Southeast Asian countries in 1997 were forced to create
a. more inflation. b. recessions. c. faster economic growth. d. money at an accelerated rate.
The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.