The adverse selection of wage cuts argument points out that:
a. employers will try to keep wages from falling when the economy is weak or the business is having trouble, and employees will not expect huge salary increases when the economy or the business is strong.
b. the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate.
c. if an employer reacts to poor business conditions by reducing wages for all workers, then the best workers with the best employment alternatives at other firms are more likely to leave, while the least attractive workers, with fewer employment alternatives, are more likely to stay.
d. those already working for firms are "insiders," while new employees, at least for a time, are "outsiders.".
c
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In most years, the foreign financial capital in the United States represented no more than what percentage of the funds used for overall physical investment in the economy?
a. 3% to 5% b. 6% to 10% c. 15% d. 16% to 20%
What is the difference between a tariff and a quota?
What will be an ideal response?
Throughout the period from 1996 to 2010, U.S. Real GDP growth has been
A. constant. B. declining. C. steadily increasing. D. fluctuating.
Consider an individual who plans to buy a new home. He has two options: (i) pay for mortgage insurance (that insures the lender in case the borrower defaults), or (ii) pay the lender a higher interest rate for the mortgage. Describe how these two options are related to the concept of risk premium and the lender's aversion to risk. Why does the interest rate on the mortgage differ in these two options?
What will be an ideal response?