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:

Liabilities

Financial obligations or debts that an entity owes to external parties.

Equity

The value of an owner's interest in a property or a company, after all debts and other obligations have been accounted for.

Accounting

The systematic process of recording, reporting, and analyzing financial transactions of a business.

Information Age

A period in human history characterized by the shift from traditional industry to an economy based on information technology.