In an economic downturn, sticky wages and prices reduce the economy's speed of adjustment because
A. hyperinflation will likely occur.
B. they cause deflation.
C. union workers would likely quit and look for work elsewhere.
D. businesses are unable to adjust quickly to changes in aggregate demand.
Answer: D
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If the desired reserve ratio is 7 percent and a bank has $10,000 of deposits, then its desired reserves are
A) $7. B) $700. C) $9,300. D) $930. E) $7,000.
A textile manufacturing unit faces low productivity due to shirking by workers. Which of the following is a possible solution to increase productivity and retain employees?
A) The provision of a lower real wage B) The provision of a lower nominal wage C) The provision of minimum wages D) The provision of efficiency wages
Some superstar athletes in the sports industry earn very high levels of income relative to other occupations, and over time the wage differential has been increasing. What could have caused this?
A) The market power of athletes' unions has increased. B) Technological advances such as cable television has increased the demand for sports entertainment. C) The supply of star athletes has decreased. D) The supply of star athletes has increased due to college athletic programs.
By taking the short position on a futures contract of $100,000 at a price of 115 you are agreeing to ________ a ________ face value security for ________
A) sell; $100,000; $115,000. B) sell; $115,000; $100,000. C) buy; $100,000; $115,000. D) buy; $115,000; $100,000.