Question
Which labor market outcome is consistent with the
Efficiency Wage Theory?Solution
Efficiency Wage Theory posits that productivity (effort) is positively related to the wage paid. Firms may find it profitable to pay a wage above the market-clearing level for several reasons: · Reduced Shirking: Higher wages increase the opportunity cost of being fired, incentivizing workers to exert more effort. · Reduced Turnover: Workers are less likely to quit, saving the firm recruitment and training costs. · Improved Quality: Higher wages attract a better pool of applicants. Crucially, this can lead to involuntary unemployment because the high wage rate (set by the firm) creates a labor surplus.
The "liquidity trap" refers to a situation where:
If price of all commodities rise in the same proportion then,
Expansionary fiscal policy in the classical model will cause aggregate demand to-----potential output?
Which school of economic thought suggested that one possible cause of inflation was a ‘push’ from the cost side?
The 'Trickle-Down Theory' in economics is most associated with the effects of:
In two commodity worlds if one good is inferior then the other must be
When the slope of average cost is negative then which of the following holds true?
What is the Capital to RiskWeighted Assets Ratio (CRAR) of scheduled commercial banks (SCBs) as of end March 2024 according to the Financial Stability R...
The concept of vicious circle of poverty is associated with
If the total revenue from sales of X is given by the equation R=100Q-2Q^2. What is the point elasticity of demand when MR=20
