If firms pay efficiency wages, they pay wages that
A) are mandated by the government.
B) will eventually lower the unemployment rate.
C) motivate workers to increase their productivity.
D) are lower than average to ensure maximum profit.
C
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In economics, risk is said to exist when:
A) the outcome of an activity is not known with certainty. B) the cost of producing a good exceeds its market price. C) net present value of an outcome is positive. D) the probability of an outcome is one.
Refer to Figure 13.2. Assume the economy is initially in equilibrium with real GDP equal to potential GDP
Other things equal, if the economy enters a recession and the government underestimates the severity of the recession when implementing fiscal policy, the output gap will ________ and the rate of inflation will ________ than if the government had correctly estimated the recession's severity. A) decrease less; decrease less B) decrease more; decrease more C) decrease more; decrease less D) not change; not change
The market in which banks borrow from other banks for short periods of time is the
a. discount market b. federal funds market c. interbank loan market d. national bank market e. liquidity market
One of the principal ways in which Congress intended the Fed to provide insurance against financial panics was to act as a "lender of first resort."
a. True b. False Indicate whether the statement is true or false