Which Statement by an Employer Is Consistent with the Market-Clearing

question 81

Multiple Choice

Which statement by an employer is consistent with the market-clearing theory of unemployment?

• A)"I pay more than the going rate so I can hire good workers."
• B)"I pay only enough to attract workers who are at the bottom of the pay scale."
• C)"I love it when inflation goes up because that drives down my wage costs."
• D)"Workers can always find jobs,if only they lower their expectations."
• E)"Unions have only their current members' interests at heart."

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Definitions:

Dividend Growth Model

A valuation method used to predict the price of a company's stock by using projected dividends and discounting them back to present value.

Retained Earnings

The portion of a company's profits that is retained or re-invested in the business instead of being paid out as dividends to shareholders.

Marginal Cost Of Capital

The cost of obtaining an additional dollar of new capital, which can influence investment and financing decisions.

Investment Opportunity Schedule

A curve depicting the relationship between the required rate of return on investments and the total amount of investment, illustrating how much investment can be undertaken for a given return.