Wage reduction policies are less common than layoffs because
A) workers never prefer wage reduction policies.
B) workers always trust the firm to tell the truth.
C) of asymmetric information.
D) of adverse selection problems.
C
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Limited liability exists when
A. the liability of owners is limited to the share of the debt they personally took on. B. partners specialize and each partner is responsible for the debts of his or her specialized area. C. the liability of owners is limited to the value of the shares in the firm they own. D. bondholders must receive their payments before stockholders can earn any money.
The real rate of interest is 4% and the anticipated rate of inflation is 1%. What is the nominal rate of interest?
A) 1% B) 3% C) 4% D) 5%
Using the labels on the graph below, the total cost for both firms at the cost-effective solution is ________, and the excess cost from using the uniform standard is___________
a. ABCGH; CGH b. ACH; CGH c. ACDEH; CDE d. ACH; CDE
It is important to distinguish between the privately held portion of the national debt and the portion held by government agencies and the Federal Reserve system because
a. the government will not have to repay the privately held debt. b. only the privately held debt creates a net interest liability for the federal government. c. the privately held debt does not create a net interest liability for the federal government. d. taxes will have to be raised in order to pay the interest on the debt held by the Federal Reserve system.