When economists assume that people are rational and respond to incentives, they mean:
A. people act with kindness.
B. people are altruistic.
C. people act in their own self-interest.
D. people are selfish.
Answer: C
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C = 2,800 + 0.9y
I = 750 G = 1,200 NX = 150 Given the equations for C, I, G, and NX above, what is the equilibrium level of GDP (Y)? What will be an ideal response?
If tax reduction and simplification are effective, then
A) fewer new firms will be established, since existing firms will make more profit. B) saving and investment in new capital will increase. C) interest rates will rise in financial markets and demand for financial assets falls. D) real wages will rise as labor supply and demand increase.
When the money supply declines by 10%, in the long run, output ________ and the price level ________
A) is unchanged; is unchanged B) declines; falls C) is unchanged; falls D) declines; is unchanged
Two variables that are inversely related tend to move in opposite directions
a. True b. False Indicate whether the statement is true or false