In the financial crisis that precipitated the 2007-2009 recession, people systematically overestimated their prospects for financial gain. Which branch of economics would most likely have expected to predict this?
A. Neoclassical economics.
B. Keynesian economics.
C. Behavioral economics.
D. Classical economics.
Answer: C
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The nominal interest rate is determined in the
A) bond market. B) stock market. C) exchange market. D) money market.
Under a flexible exchange rate system, a nation that offers more attractive investment opportunities than its trading partners can expect to run a
a. surplus on current account transactions. b. deficit on current account transactions. c. balance of trade surplus. d. capital account deficit.
"Hawks" are economists who argue that:
a) the goal of full employment should take priority over the goal of low inflation. b) greater central bank action is needed in times of economic hardship. c) too much monetary policy can have inflationary effects. d) the Federal Reserve should be abolished.
The Laffer curve shows the relationship between the tax rate and the inflation rate.
Answer the following statement true (T) or false (F)