If fiRms Are Paying Efficiency Wages, They

question 139

Multiple Choice

If firms are paying efficiency wages, they

• A) may be reluctant to increase nominal wages when aggregate demand increases.
• B) are highly vulnerable to import competition.
• C) may be targeted for takeover by firms paying market wages.
• D) may be reluctant to cut wages when aggregate demand declines.

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Definitions:

Economic Expansion

Economic expansion refers to a phase where an economy experiences increased levels of activity and growth across its industries and sectors, typically marked by rising GDP.

Thaddeus Stevens

was a nineteenth-century U.S. congressman and a fierce advocate for the abolition of slavery and equal rights during and after the Civil War.

Confederate States

The Confederate States of America was a collection of 11 southern states that seceded from the United States in 1860-1861, leading to the American Civil War.

Economic Independence

The state of having sufficient personal wealth to live, without needing to work actively for basic necessities.