To prevent nations with an inflation bias from entering the Eurozone, the Maastricht criteria for accession include:
A) a trial period of joining the Eurozone to see how they fare.
B) a three-month period of low interest rates.
C) a lengthy trial period of demonstrated commitment to low inflation before joining.
D) promises and written commitments to low deficits and debt reduction on entering.
Ans: C) a lengthy trial period of demonstrated commitment to low inflation before joining.
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Which of the following countries became the newest members of the European Union in 2007?
A) Bulgaria and Romania B) Greece and Sweden C) Albania and Cyprus D) None of the above
A good salesperson can sell $1,000,000 worth of goods, while a poor one can sell only $100,000 worth of goods. Job applicants know if they are good or bad, but the firm does not. A firm will offer job applicants a choice between a fixed salary of $25,000 or 20% commission. Assuming risk-neutral salespersons and the possibility of opportunistic behavior, will this choice of contracts allow the
firm to distinguish between good salespersons and bad ones before the hiring decision is made? What will be an ideal response?