The analysis in Chapter 15 implies that the housing bubble of the last decade would likely have been avoided if
A) the Fed had pursued a monetary equilibrium policy as opposed to cheap interest rate policies.
B) people weren't as greedy as they were during the beginning and middle of the bubble.
C) price controls were established to keep home prices from rising as high as they did.
D) markets were better regulated.
A
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Suppose you read in the Wall Street Journal that actual investment in Canada in 2003 was less than the intended investment Canadian businesses had hoped to make. You would conclude that in 2003, the level of inventories in Canada was
a. less than desired and that Canadian output rose b. less than desired and that Canadian output fell c. greater than desired and that Canadian output rose d. greater than desired and that Canadian output fell e. greater than desired but would be unable to tell what effect it had on Canadian output
If a prospective employee is not offered his/her reservation utility or reservation wage, then he/she will
A. tend to look for another job or withdraw from the labor market. B. seek a larger fringe benefit package. C. accept the job because a wage below the reservation utility is very attractive. D. use the job as the basis for a career, assuming that wages will increase beyond the marginal revenue product over time.
Rachel left her job as a graphic artist, where she earned $42,000 per year, to open her own graphic arts firm. Her implicit costs of the new business include:
A. both the expenses incurred for office space, equipment, and supplies and her forgone salary of $42,000 per year. B. only her forgone salary of $42,000 per year. C. neither the expenses incurred for office space, equipment, and supplies nor her forgone salary of $42,000 per year. D. only the expenses incurred for office space, equipment, and supplies.
Which of the following statements best reflects how a behavioral economist views individual decision making?
A. Alex makes wrong decisions sometimes, but usually it is only when he has been given bad information. B. Kara carefully calculates and weighs the expected benefits and costs of every option before making a decision. C. Alicia may appear to care about others, but even her seemingly altruistic behaviors are really about furthering her own interests. D. Balin tries to make good, well-thought-out decisions, but his desire for utility in the present means that he often gives in to costly temptations.