One implication of compensating differentials is that laws passed to protect the health and safety of workers may not make workers better off than they were prior to the passages of the laws. Why is this so?
A) Workers may suffer from cognitive dissonance, which means that the perception workers have that their jobs are hazardous is not true.
B) If the laws make the work environment safer, there is no reason to pay workers a compensating differential for the risk associated with their jobs.
C) In non-competitive markets, workers are unlikely to receive a compensating differential to compensate for jobs with extra risk. As a result, after the laws are passed their wages will not change.
D) The principal-agent problem that exists in the workplace may cause workers to shirk more after the work environment becomes safer.
B
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The most likely cause of a hyperinflation is
A) central bank incompetence. B) the inability to finance government spending through taxation or borrowing. C) an acute shortage of natural resources. D) over-aggressive labor unions.
Refer to the above figure. If a price ceiling of $3 was set
A) the quantity sold would be 80 units. B) there would be a surplus of 40 units. C) there would be a shortage of 40 units. D) there would be a shortage of 20 units.
Procyclical fiscal policies:
A. reduce cyclical fluctuations in the economy, but not as effectively as countercyclical fiscal policies. B. increase cyclical fluctuations in the economy. C. reduce cyclical fluctuations in the economy more effectively than countercyclical fiscal policies. D. reduce cyclical fluctuations in the economy about as effectively as countercyclical fiscal policies.
Data on labor-force flows show that
A) in any given month, almost none of the unemployed gets jobs. B) in any given month, almost all of the unemployed gets jobs. C) the average duration of unemployment is about 2 weeks. D) the average duration of unemployment is about 2 years. E) in any given month, about one-fourth of the unemployed get jobs.