What is collective bargaining? How can it result in higher unemployment in a country?
What will be an ideal response?
Collective bargaining refers to contract negotiations between an employer and a labor union representing workers. One of the objectives of collective bargaining is to bargain for better wages for workers. As a result, collective bargaining fixes the wage rate above the market clearing level. Once the wages are fixed at a higher level, wage rigidity prevents it from falling. At this higher level of wage, quantity supplied of labor exceeds the quantity demanded of labor and this causes unemployment.
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Milton Friedman would eliminate the destabilizing effect of the Federal Reserve's monetary policy by
A) eliminating the Federal Reserve. B) removing the Federal Reserve's political independence. C) requiring that the Federal Reserve choose a monetary aggregate and increase it at a fixed percentage rate each year. D) eliminating the Federal Reserve's right to carry out open-market operations.
In an increasing-cost industry, expansion of output
A) causes input prices to rise as demand for them grows. B) leaves input prices constant as input demand grows. C) causes economies of scale to occur. D) occurs under conditions of increasing returns to scale. E) occurs without diminishing marginal product.
Low cost strategies are usually found in industries where
a. Products are not particularly differentiated b. Price competition tends to be fierce c. Both a and b d. None of the above
Business cycles are recurring periods of economic growth and decline in an economy's real GDP
a. True b. False Indicate whether the statement is true or false