The classical model uses the assumption that
A) all wages and prices are flexible.
B) interest rates are not flexible.
C) monopoly is widespread in the economy.
D) economic markets are fragile and have no tendency to move towards an equilibrium.
A
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A college professor hires a student to babysit her children and pays the student an efficiency-wage. Which of the following is correct about the wage the student earns?
a. The wage is higher than the wage the student could earn working a similar job elsewhere. b. The wage is the same as the wage the student could earn working a similar job elsewhere. c. The wage is lower than the wage the student could earn working a similar job elsewhere. d. The wage is likely to result in the student shirking responsibilities.