Whenever I go to the grocery store, I always stop at Starbucks on the way home. Therefore, going to the grocery store causes me to go to Starbucks. This statement is an example of the
A. ceteris paribus fallacy.
B. fallacy of logic.
C. fallacy of inductive reasoning.
D. post hoc, ergo propter hoc fallacy.
Answer: D
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An optimal decision is one that chooses
A. the most desirable alternative among the possibilities permitted by the resources available. B. the lowest cost method of meeting goals, without regard to quality or any other feature. C. among various possible goals and offends no one, so that all are equally happy. D. among equally important goals, and thereby avoids the “indispensable necessity” syndrome. E. among possible goals in such a way that spends as little money as possible.
Suppose that the central bank increases interest rates in an economy. How would this affect aggregate demand and inflation?
A) Aggregate demand would fall and inflation would rise. B) Aggregate demand would fall and inflation would fall. C) Aggregate demand would rise and inflation would rise. D) Aggregate demand would rise and inflation would fall.
Investment spending is sensitive to interest rates.
Answer the following statement true (T) or false (F)
If a person has an absolute advantage in some activity, she must have a comparative advantage in that activity as well.
Answer the following statement true (T) or false (F)