The Efficiency Wage Theory of Aggregate Supply Implies That

question 20

Multiple Choice

The efficiency wage theory of aggregate supply implies that

• A)the AS-curve is vertical
• B)paying employees higher wages won't induce them to work harder
• C)even unanticipated changes in monetary or fiscal policy have no effect on the level of output
• D)since the cost of changing wages and prices is low, wages can easily be adjusted in proportion to price changes to maintain full employment
• E)none of the above

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Definitions:

Cortices

The outer layers or regions of an organ or structure, such as the cerebral cortex in the brain or the cortex of plant roots and stems.

Cerebrum

The largest part of the brain responsible for voluntary activities, intelligence, memory, and emotional responses.

Corpus Callosum

A broad band of nerve fibers joining the two hemispheres of the brain, facilitating communication between them.

Cerebral Hemispheres

The two halves of the brain, each controlling different functions and processes, with the left hemisphere typically managing logic and language, and the right, creativity and spatial abilities.