Wages tend to be "sticky" because:
A. contracts are often negotiated for long terms and cannot be easily changed.
B. constantly changing wages creates uncertainty and costs the employer a lot of time and energy to change wage rates.
C. workers are less likely to work as hard if their pay may be cut due to market performance and not their performance.
D. All of these are possible reasons why wages might be sticky.
Answer: D
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New growth theory supports the idea that
I. economic growth can continue as long as we keep finding new ideas. II. increases in human capital can lead to greater rates of economic growth. A) I only B) II only C) Both I and II D) Neither I nor II
Which of the following transactions would be excluded in the capital account?
a. A Japanese citizen purchases a U.S. Treasury bill. b. A Japanese citizen purchases an office building in Manhattan. c. A U.S. citizen purchases a share of stock from a Japanese company. d. An American purchases a Toyota.
Suppose you would have to pay Alicia at least $150 to get her to part with a ticket she just bought to see her favorite band play next Friday. Loss aversion implies that if Alicia had not yet bought the ticket, she would:
A. be willing to pay exactly $150 for it. B. be willing to pay less than $150 for it. C. be willing to pay more than $150 for it. D. no longer be interested in purchasing it.
If the cyclical rate of employment equals 1 percent and the actual rate of unemployment equals 8 percent, then the natural rate of unemployment must equal:
A. 12.5 percent. B. -7 percent. C. 9 percent. D. 7 percent.