Author Question: What are three major ways that corporations can cope with the principal-agent problem? What will ... (Read 37 times)

formula1 · **on:** Jun 29, 2018

What are three major ways that corporations can cope with the principal-agent problem?

What will be an ideal response?

Question 2

In Zealand, banks' desired reserve ratio is 20 percent and there is no currency drain. The money multiplier equals ________.

A) 0.50
B) 0.20
C) 20.0
D) 5.0

fromAlphatoOmega22 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

First, employees can be made part-owners of the corporation. Second, employees can be given incentive pay linked to achieving targets that serve the interests of the owners. Third, managers can be given long-term contracts that encourage them to pursue long-term strategies that can yield higher profit over time.

Answer to Question 2

D