When managers of firms are given fixed salaries, which are not tied to the firm's profits, they generally put forth less effort than they otherwise would. This is an example of:
A. risk aversion.
B. adverse selection.
C. moral hazard.
D. None of the answers are correct.
Answer: C
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As the workforce ages,
A) structural and frictional unemployment increase. B) cyclical unemployment declines. C) cyclical unemployment increases. D) the natural rate of unemployment declines.
If a perfectly competitive firm is producing 2,000 units and, at the 2,000th unit, the difference between marginal revenue and marginal cost (MR - MC) is zero, which of the following is true?
A) The firm is maximizing profit. B) The firm should decrease production to maximize profit. C) The firm should increase production to maximize profit. D) The firm should exactly double production to maximize profit.
The money supply will grow even larger through deposit creation when
A. People decide to use cash instead of checks for transactions. B. Interest rates rise, causing people to move money out of banks and into bonds. C. Banks stop making new loans because they are too risky. D. Consumers, businesses, and government increasing their borrowing.
When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the quantity of labor supplied is higher and the quantity demanded of labor is lower than at the equilibrium wage
a. True b. False Indicate whether the statement is true or false