Which of the following countries cannot use monetary expansion in order to reduce youth unemployment?
a. South Africa
b. Spain
c. India
d. Greece
b. Spain
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Your roommate, Serafina, a psychology major, said, "The problem with economics is that it assumes that consumers and firms always make the correct decision. But we know that everyone's human, and we all make mistakes"
Do you agree with her comment? A) I disagree with her. Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally, meaning they make the best decisions given their knowledge of the costs and benefits. B) Yes, I agree with her. One cannot make predictions about economic behavior because in reality people make incorrect choices in many situations. C) Yes, I agree with her. Economic theory should allow for irrational behavior so that we can have more reliable predictions. D) I disagree with her. If we cannot assume that decisions are correct, then we will not be able to examine the moral implications of these decisions.
Scarce government resources in developing countries would be best spent on
a. circulating basic health information b. modern medical equipment c. medical schools d. health care insurance e. none of the above
Which of the following would be most likely to improve the standard of living of a less-developed country?
a. development of strong labor unions b. more foreign investment, attracted by the expectation of economic and political stability c. adoption of trade barriers (higher tariffs and quotas) d. widespread use of price controls to allocate goods and resources
To expand the money supply the Fed could lower the required reserve ratio, lower the discount rate, or purchase government securities
Indicate whether the statement is true or false