Most college professors are granted tenure after six years of employment. Tenure implies a lifetime appointment. What problem does this situation create, and how can colleges minimize the problem?
What will be an ideal response?
Receiving a lifetime appointment creates a moral hazard. Knowing that one cannot be fired creates an incentive to shirk work. Colleges minimize the problem by looking for signals such as publications and an ongoing commitment to one's discipline during the six year probation period with the belief that those who work hard for these six years are also likely to work hard throughout the future.
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________ increases the size of the money multiplier
A) An open market sale of government securities by the Fed B) An increase in the currency drain ratio C) A reduction in the desired reserve ratio D) An open market purchase of government securities by the Fed E) An increase in the size of open market operations
If a competitive firm is in short-run equilibrium, then
A) economic profits equal zero. B) economic profits will be positive. C) economic profits will be negative. D) All of the above are possible in the short run.