The theory of bounded rationality states that it is likely for consumers to have perfect information
a. True
b. False
Indicate whether the statement is true or false
False
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In an open economy with strong international trade, increases in government spending are likely to have an overall "crowding out" effect
Indicate whether the statement is true or false
If one firm in a perfectly competitive industry is somehow able to produce at a lower cost than competing firms in the short run,
a. the competing firms will adopt similar production techniques in the long run. b. the more efficient firm will earn higher profits than the competing firms in the long run. c. the competing firms will earn higher profits than the more efficient firm in the short run. d. the competing firms will go out of business in the long run.
Moving Water Around The San Diablo dam has electricity generating turbines on a chute that connects lower and upper reservoirs. During the day, water is drained from the upper reservoir to the lower to produce electricity. But at night, electricity is used to pump the water back up to the upper reservoir. Since the water is just going back and forth, how can wealth be generated?
People who hold well-diversified portfolios of stocks have greatly reduced or eliminated
a. firm-specific risk, and so they do not need to worry about their wealth decreasing as a result of recessions. b. market risk, and so they do not need to worry about their wealth decreasing as a result of recessions. c. firm-specific risk, but still they have reason to worry about their wealth decreasing as a result of recessions. d. market risk, but still they have reason to worry about their wealth decreasing as a result of recessions.