The Business Cycle Dating Committee, a part of the ________, ...

[codyclark]

The Business Cycle Dating Committee, a part of the ________, officially decides when a recession begins and ends.
 
  A) National Bureau of Economic Research B) federal government
  C) Bureau of Labor Statistics D) Federal Reserve

Question 2

Grade inflation is widespread; college students receive higher grades on tests and exams today for work that would have received lower grades in the past.
 
  One recent study found that 41 percent of students had grade point averages of A-minus or higher in 2009, compared to just 7 percent in 1969 . In other words, grades improve while actual learning does not. Employers often use grades and college degrees as signals in the job market where there is asymmetric information. What effect would grade inflation have on the effectiveness of college degrees and grades as signals?

[efwsefaw]

Answer to Question 1

A

Answer to Question 2

Signaling is a possible market solution to the problem of asymmetric information in the job market. A job applicant, who has private information about his skills and capabilities, uses his degree and grades to send a signal to potential employers. Since acquiring a degree or getting good grades comes at a cost, the employer is assured that students who do so are likely to be smarter and more diligent than people with poor grades. However, if grades increase without any real increase in learning, the effectiveness of grades as a signal in the job market will fall. Grades will no longer be an effective way for an employer to distinguish between smart and not-so-smart students. Potential job applicants and employers would then have to look at other signals to reduce the problem of asymmetric information.
See http://www.bostonglobe.com/metro/2013/12/05/with-its-most-common-grade-harvard-earns-disapproval-but-has-company/kCeheDYfuDjSRcM1sVljfK/story.html

[codyclark]

Gracias!

[zacnyjessica]

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