The rate of interest banks charge each other for lending reserves is the:

Return to the situation with the executive from the previous question. Now assume that shareholders cannot observe effort, so cannot specify how hard the executive works in the contract but must induce it through the incentive scheme. Which of the following wage contracts would work out best for shareholders in equilibrium?

a. A flat wage w = 2,500 with no profit share. b. A share of 35% of the gross profits. c. A share of 55% of the gross profits. d. A share of 70% of the gross profits.

When you add payroll taxes and Medicare, the tax system becomes more progressive than when we solely consider the federal income tax

a. True b. False Indicate whether the statement is true or false