Suppose Bob Owns Two Factories That Are Located Several Hundred

question 34

Multiple Choice

Suppose Bob owns two factories that are located several hundred miles apart. Bob decides to manage one of the plants himself, and he hires another person to manage the second plant. For purposes of operating the second plant, who is the agent and who is principal?

• A) Bob is the agent and the manager is the principal.
• B) Bob is the principal and the manager is Bob's agent.
• C) Both Bob and the manager are principals.
• D) We need more information to determine the identities of the principal and the agent in this case.

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Definitions:

Balanced Budget

A financial statement demonstrating that revenues and expenditures are equal, leading to no deficit for the period.

Fiscal Policy

Government strategies for adjusting its spending levels and tax rates to influence a nation's economy.

Budget Deficits

A financial situation where a government's expenditures surpass its revenues within a specific period.

Government Expenditures

The total amount of money spent by the government in a particular period, including spending on goods, services, and public projects.