Which of the following is a TRUE statement about the economic assumption of rationality?
A. Individuals who are rational necessarily ignore the interests of others.
B. People make decisions as if they are most selfish in the world.
C. Individual behavior may be irrational but group behavior is always rational.
D. Individuals generally act as though they are rational.
Answer: D
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In monopolistic competition, firms compete on product quality, price and marketing
Indicate whether the statement is true or false
According to the Laffer curve, the federal tax rate affects:
a. incentive to work. b. savings. c. investment. d. tax revenue. e. All of these.
To measure how productive workers in the economy are, the best measure to use would be
a. real GDP. b. GDP divided by the population. c. GDP divided by the nation's capital stock. d. GDP divided by hours worked.
Protectionism may fail to reduce a current account deficit because it
a. depreciates the dollar. b. invites retaliation, which hurts exports. c. encourages exports. d. does not reduce imports.