What is insider–outsider theory? How does it explain the downward inflexibility of wages?
What will be an ideal response?
This theory suggests that people who are looking for work at firms (outsiders) may not be able to underbid the wages of people already working at firms (insiders) during periods of recession or widespread unemployment. The reason for this situation is that employers might fear that insiders would resent the underbidding of outsiders and refuse to cooperate with them. Cooperation and teamwork are important in modern businesses. Thus, outsiders who want to work for the firm may not be hired at lower wages than insiders already working for the firm even during periods of higher unemployment.
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State and explain three [or some other number chosen by the instructor] reasons why the scope for further expansion of developing country commodity exports is likely to be limited
What will be an ideal response?
The theory of purchasing power parity says:
A. the real exchange rate is always less than one. B. the dollar price of a basket of goods in the U.S. should equal the yen price of a basket of goods in Japan. C. a dollar should buy the same goods no matter where in the world you go. D. the real exchange rate is always greater than one.