The answer is: "It is sometimes in the best interest of business firms to pay their employees higher-than-equilibrium wage rates." What is the question?
A) What do efficiency wage models imply?
B) What do classical economists say?
C) What is the central tenet of Say's law?
D) What did John Maynard Keynes say was the reason for inflexible wages?
E) none of the above
A
You might also like to view...
In what way does long-run equilibrium under monopolistic competition differ from long-run equilibrium under perfect competition?
A) Firms in perfect competition achieve allocative efficiency while firms in monopolistic competition achieve brand efficiency. B) Firms in perfect competition achieve productive and allocative efficiency while firms in monopolistic competition achieve neither allocative nor productive efficiency. C) The only difference is that in a monopolistically competitive market there are many brands to choose from while in a perfectly competitive market there is one standard product. D) Firms in perfect competition achieve productive efficiency while firms in monopolistic competition achieve allocative efficiency.
One of the major weaknesses of the original Keynesian approach to the business cycle was
A) the assumption that firms were perfectly competitive. B) the failure to explain why wages were rigid. C) the denial of the existence of the Pigou effect. D) the assumption that the demand for labor depended on the real wage.
The most commonly used tool by the Federal Reserve to control the monetary base is
a. changes in the discount rate. b. changes in tax rates on commercial banks. c. changes in legal required reserve ratios. d. open market operations.
From 2007 to 2008, the Federal Reserve System reduced interest rates, the price that borrowers pay. As a result, economists expected demand for money to
a. increase. b. decrease. c. not change. d. be influenced by the interest rate, but with an uncertain effect.