Which of the Following Would Be an Example of a Principal

question 277

Multiple Choice

Which of the following would be an example of a principal trying to deal with a moral hazard problem?

• A)The parents of an infant secretly place video cameras in their house before the baby-sitter arrives.
• B)An insurance company checks police records to determine if its policyholders have received traffic citations.
• C)An employer examines his workers' output on a daily basis.
• D)All of the above are correct.

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Definitions:

Inflation

The speed at which prices for goods and services generally go up, diminishing the buying power.

Industrial Base

The sector of the economy made up of manufacturing, engineering, and infrastructure companies, which is fundamental for a country's economic development.

John D. Rockefeller

John D. Rockefeller was an American industrialist and philanthropist, best known for founding and leading the Standard Oil Company.

Andrew Carnegie

A 19th-century industrialist and philanthropist who led the expansion of the American steel industry.