Wages that are "sticky":
A. pull other prices up or down with them when they change.
B. have not changed, in real terms, for decades.
C. are stuck where they are and fail to adjust downwards in a recession.
D. are pegged to other variables, such as product prices.
Ans: C. are stuck where they are and fail to adjust downwards in a recession.
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Of the following methods that banks might use to reduce moral hazard problems, the one not legally permitted in the United States is the
A) requirement that firms keep compensating balances at the banks from which they obtain their loans. B) requirement that firms place on their board of directors an officer from the bank. C) inclusion of restrictive covenants in loan contracts. D) requirement that individuals provide detailed credit histories to bank loan officers.
When a firm charges each customer the maximum price that the customer is willing to pay, the firm
A) engages in a discrete pricing strategy. B) charges the average reservation price. C) engages in second-degree price discrimination. D) engages in first-degree price discrimination.