Whenever Josh goes to his favorite restaurant, he wants to buy tiramisu, his favorite dessert. Despite the fact he would enjoy the flavor of the tiramisu the same amount every time, Josh only buys it when others are having dessert, and never buys it if
he would be the only one having dessert. Behavioral economists would say that Josh's decision is affected by:
A. the availability heuristic.
B. confirmation biases.
C. framing effects.
D. the self-serving bias.
Answer: C
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Which of the following is a criterion by which Gordon judges the desirability of any given level of actual real GDP?
A) Actual real GDP is too low if it causes the unemployment rate to be higher than necessary. B) Actual real GDP is too high if it strains a nation's ability to produce and puts upward pressure on the inflation rate. C) Actual real GDP is at a desirable level if there is no tendency for inflation to accelerate or decelerate. D) All of the above.
In the recent Global Economic Crisis, the end of cash-out mortgage refinancing caused
A) LM curve to shift to the right. B) LM curve to shift to the left. C) IS curve to shift to the left. D) LM curve to shift to the right.
Moral hazard is best described as
a. an action by an individual that endangers others. b. an action that puts one's salvation at risk. c. the presence of insurance increasing risk taking behavior. d. vigilance by individuals to keep total insurance claims at a minimum to keep rates low.
Discouraged workers are ________ in the unemployment rate, and this tends to ________ the unemployment rate
A) counted; overstate B) counted; understate C) not counted; overstate D) not counted; understate