The reason for the badness of performance compensation caps.

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Answer 1

Question

Chapter 1, Problem 1MC

To determine

The reason for the badness of performance compensation caps.

Expert Solution & Answer

Explanation of Solution

The compensation cap refers to the maximum limit on the salary paid. The compensation cap encourages the employees to be productive up to this limit; but it makes the employees less productive beyond the limit or cap value. This is because the employees will not receive any benefit after this limit. Therefore, the compensation cap will affect badly on the productivity of the economy. Thus, option ‘b’ is correct.

Economics Concept Introduction

Compensation cap: Compensation cap refers to the maximum limit on the salary paid to the employees.

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a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? $ billion b. If the MPC is 0.6, how much does government purchases need to change to shift aggregate demand by the amount you found in part a? $ billion Suppose instead that the MPC is 0.95. c. How much does aggregate demand and government purchases need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $ billion and government purchases need to change by $ billion.

Answer 2

Question

Chapter 1, Problem 1MC

To determine

The reason for the badness of performance compensation caps.

Expert Solution & Answer

Explanation of Solution

The compensation cap refers to the maximum limit on the salary paid. The compensation cap encourages the employees to be productive up to this limit; but it makes the employees less productive beyond the limit or cap value. This is because the employees will not receive any benefit after this limit. Therefore, the compensation cap will affect badly on the productivity of the economy. Thus, option ‘b’ is correct.

Economics Concept Introduction

Compensation cap: Compensation cap refers to the maximum limit on the salary paid to the employees.

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Answer 3

Question

Chapter 1, Problem 1MC

To determine

The reason for the badness of performance compensation caps.

Expert Solution & Answer

Explanation of Solution

The compensation cap refers to the maximum limit on the salary paid. The compensation cap encourages the employees to be productive up to this limit; but it makes the employees less productive beyond the limit or cap value. This is because the employees will not receive any benefit after this limit. Therefore, the compensation cap will affect badly on the productivity of the economy. Thus, option ‘b’ is correct.

Economics Concept Introduction

Compensation cap: Compensation cap refers to the maximum limit on the salary paid to the employees.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 1, Problem 1MC

To determine

The reason for the badness of performance compensation caps.

Expert Solution & Answer

Explanation of Solution

The compensation cap refers to the maximum limit on the salary paid. The compensation cap encourages the employees to be productive up to this limit; but it makes the employees less productive beyond the limit or cap value. This is because the employees will not receive any benefit after this limit. Therefore, the compensation cap will affect badly on the productivity of the economy. Thus, option ‘b’ is correct.

Economics Concept Introduction

Compensation cap: Compensation cap refers to the maximum limit on the salary paid to the employees.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 1, Problem 1MC

To determine

The reason for the badness of performance compensation caps.

Expert Solution & Answer

Explanation of Solution

The compensation cap refers to the maximum limit on the salary paid. The compensation cap encourages the employees to be productive up to this limit; but it makes the employees less productive beyond the limit or cap value. This is because the employees will not receive any benefit after this limit. Therefore, the compensation cap will affect badly on the productivity of the economy. Thus, option ‘b’ is correct.

Economics Concept Introduction

Compensation cap: Compensation cap refers to the maximum limit on the salary paid to the employees.

Answer 6

Chapter 1, Problem 1MC

To determine

The reason for the badness of performance compensation caps.

Expert Solution & Answer

Explanation of Solution

The compensation cap refers to the maximum limit on the salary paid. The compensation cap encourages the employees to be productive up to this limit; but it makes the employees less productive beyond the limit or cap value. This is because the employees will not receive any benefit after this limit. Therefore, the compensation cap will affect badly on the productivity of the economy. Thus, option ‘b’ is correct.

Economics Concept Introduction

Compensation cap: Compensation cap refers to the maximum limit on the salary paid to the employees.

Answer 7

Chapter 1, Problem 1MC

To determine

The reason for the badness of performance compensation caps.

Answer 8

Expert Solution & Answer

Explanation of Solution

The compensation cap refers to the maximum limit on the salary paid. The compensation cap encourages the employees to be productive up to this limit; but it makes the employees less productive beyond the limit or cap value. This is because the employees will not receive any benefit after this limit. Therefore, the compensation cap will affect badly on the productivity of the economy. Thus, option ‘b’ is correct.