If a firm operates in a competitive industry and its unionized labor force is successful in bargaining for a wage increase, where is the firm likely to get the money to pay the higher wages?
If it is a competitive industry, the owners are likely to be earning the normal return, so paying out of profits would not be an option. Also, competition limits the firm's ability to raise its price and pass along the increase to consumers. It is most likely that the firm will cut other costs. A strong possibility is that this will result in fewer employees.
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Nominal GDP measures the value of all goods and services
A. without inflation. B. in fixed dollars. C. in constant dollars. D. in current dollars.
Chain-weighted price indices are constructed such that
A) all years' levels of GDP are directly related to a base year level of GDP. B) prices of one good can be directly compared with prices of other goods. C) prices in different years can be directly compared with one another. D) prices in different economies can be directly compared with one another.
In general, large current account deficits have to be financed by:
A) capital outflows abroad. B) capital inflows from abroad. C) trade barriers. D) none of the above.
The Friedman natural rate theory is built upon
A) rational expectations. B) adaptive expectations. C) flexible wages and prices. D) the assumption of one Phillips curve. E) b and c