One piece of evidence that possibly supports the bounded-rationality assumption of behavioral economics is that experiments appear to have shown that
A. total utility is declining when marginal utility is negative.
B. people make the same decisions in calm situations than in situations in which emotions come into play.
C. people make different decisions in calm situations than in situations in which emotions come into play.
D. total utility is maximized when marginal utility is equal to zero.
Answer: C
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The hypothesis that people combine the effects of past policy changes on important economic variables with their own judgment about the future effects of current and future policy changes is the basis of the
A) short-run Phillips curve hypothesis. B) rational expectations hypothesis. C) demand-pull inflation hypothesis. D) adaptive hypothesis.
Suppose the supply of apartments in Minneapolis is perfectly elastic. The effect of a $100 per month tax on all apartments is that
A) landlords pay none of the tax and there is a surplus of apartments. B) landlords pay all of the tax and suffer all of the deadweight loss. C) landlords pay all of the tax and no changes take place in the quantity of apartments supplied. D) renters pay all of the tax. E) the government collects no tax revenue because the supply is perfectly elastic.
What is the present value of four payments of $5,000 at the end of each of the next four years if the interest rate is 2 percent?
A) $9,430.50 B) $20,000.00 C) $19,038.64 D) $18,358.12
If there is an increased interest in U.S. goods by Indian consumers, which of the following will happen in the market for Indian rupees?
a. A rightward shift of the supply curve, a depreciation of the rupee, and a larger number of rupees traded b. A rightward shift of the demand curve, a depreciation of the rupee, and a smaller number of rupees traded c. A rightward shift of the demand curve, an appreciation of the rupee, and a larger number of rupees traded d. A leftward shift of the demand curve, a depreciation of the rupee, and a smaller number of rupees traded e. A leftward shift of the supply curve, an appreciation of the rupee, and a smaller number of rupees traded.