During a recession, ______.
a. earnings and profits decrease, and government revenues increase
b. earnings and profits increase, and government revenues decrease
c. earnings, profits, and government revenue all decrease
d. earnings, profits, and government revenue all increase
c. earnings, profits, and government revenue all decrease
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Refer to Figure 8.5. An efficiency wage in this economy would be represented by a real wage of ________ and an employment level of ________
A) w1; L1 B) w1; L2 C) w2; L1 D) w2; L3
Why do workers tend to choose low effort levels when they are compensated with fixed wage payments?
A) Workers ignore the cost of effort B) The net compensation after deducting the cost of effort is always higher when the worker provides low effort. C) Workers care more about the stability of income than the level of income. D) Workers tend to be risk averse and tend to choose low-intensity alternatives.