Which of the following best explains the difference between neoclassical economics and behavioral economics?
A. Neoclassical economics believes that government should play a minimal role in the
economy, while behavioral economics calls for a more active role for government.
B. Neoclassical economics assumes that people are rational in their decision making, while
behavioral economics believes people make systematic errors.
C. There is no real difference; behavioral economics just studies more intently how the
rational decision-making process works.
D. Neoclassical economics no longer offers valid explanations for economic outcomes, while
behavioral economics does.
Answer: B
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The identity stating that the total amount spent on final output equals the amount received for final output is known as the
A) equation of exchange. B) circular flow identity. C) identity equation. D) fundamental law of economics.
If income were distributed equally our economic _________ would suffer.
Fill in the blank(s) with the appropriate word(s).
At the outset of the Civil War, _______________ had a significant advantage in arms production; however, ____________ was able to increase production more rapidly
a. the South; the North b. the North; the South c. neither the North nor the South; the North d. the North; the North also
Suppose the central bank increases the money supply in an economy unexpectedly during a year. If the current inflation rate in this country is 3.4 percent, then according to new classical economists, the expected inflation rate for the following year would be:
a. 3.4 percent. b. less than 3.4 percent. c. 2.4 percent, because people form their expectations adaptively. d. around 6.8 percent. e. greater than 3.4 percent.