If the level of government expenditures is given, budget surpluses and deficits depend on tax revenues, which tend to vary directly with GDP.

Economists refer to the general problem of ________ as a principal-agent relationshi

A) moral hazard B) adverse selection C) negative externalities D) pecuniary externalities

Raising funds through ________ is called indirect finance

A) issuing stock B) issuing bonds C) financial intermediaries D) retaining earnings