The role of unions is:
A. unnecessary if the market does a good job of determining fair wages.
B. to provide firms with a mechanism to more efficiently fire less productive workers.
C. gaining power in the United States.
D. All of these statements are true.
A. unnecessary if the market does a good job of determining fair wages.
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In the money market, if the interest rate exceeds the equilibrium interest, there is a surplus of money. How is the surplus eliminated?
A) People buy bonds to rid themselves of the surplus money, bidding up their price and pushing interest rates down. B) Banks will lend out the surplus, lowering interest rates. C) The Federal Reserve will destroy currency, reducing the quantity of money. D) The high interest rate increases the demand for money, eliminating the surplus.
Nonexcludability is a feature of
A) goods but not services. B) all nonrival goods. C) goods with an external cost. D) public goods.
Is each of the following situations an example of savings, investment, or neither? In each case explain your choice
(a) A savings and loan association lends money for the purchase of "junk" (not backed) bonds. (b) John's income is $25,000 per year; $22,000 is spent on consumer goods and the remaining money is used purchase stock in the local electric company. (c) Just before retirement a couple sells their shares of Pacific Bell stock and puts the proceeds in a bank savings account. (d) The city of Los Angeles rebuilds highways after an earthquake. (e) In order to improve the income earning potential of current welfare recipients, the federal government increases the size of income transfers.
Under the liquidity premium theory the shape of the yield curve depends on
A) the relative return of investments in common stocks versus investments in corporate bonds. B) the size of the federal government's budget deficit. C) government tax treatment of long-term versus short-term bonds. D) the expected pattern of future short-term rates and the size of the term premium at each maturity.