Which Is the Distinguishing Feature of the Standard Cobweb Model

question 11

Multiple Choice

Which is the distinguishing feature of the standard cobweb model?

• A) The firm is a perfectly discriminating monopsonist.
• B) Wages and employment levels adjust slowly over time.
• C) Payroll taxes create a tax wedge, which in turn increases overall employment levels.
• D) Real wages steadily increase.
• E) Capital is not fixed in the short run.

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Definitions:

Retained Earnings

Profits that a company retains at the end of a fiscal period, which are not distributed to shareholders as dividends but are reinvested in the business.

Remeasured

The process of adjusting the book value of a foreign currency transaction on the financial statements to reflect the current exchange rate.

Depreciation Expense

An accounting method used to allocate the cost of a tangible asset over its useful life, reflecting wear and tear, deterioration, or obsolescence.

Current Rate Method

A method of foreign currency translation where all financial statement line items are translated at the current exchange rate.