If it takes you an hour to make a rational decision and the opportunity cost of that hour is $100, you will:
A. always make rational decisions.
B. make rational decisions only if the benefit from doing so is less than $100.
C. make rational decisions only if the benefit from doing so exceeds $100.
D. never make rational decisions.
Answer: C
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As applied to voter behavior, the "rational ignorance" hypothesis claims
A) voters will have no incentive to be informed of political issues. B) voters will stop gathering information once the marginal costs exceed the marginal benefits. C) voters only vote on the basis of their instinctual or gut feelings. D) voters are selfish.
Explain how indirect crowding out can offset expansionary fiscal policy
What will be an ideal response?
When a country exports fewer goods and services than it imports, this is called
A. the terms of trade. B. the exchange rate. C. a balance of trade deficit. D. a balance of trade surplus.
Which of the following statements is true with respect to a tariff on imported cheese?
A. It lowers the price of cheese. B. It lowers domestic cheese producers' profits. C. It creates tax revenues for the government. D. It cannot result in retaliation.