People's tendency to prefer the "default" option over other options is known in prospect theory as the:
A. Anchoring effect
B. Mental accounting effect
C. Status quo bias
D. Confirmation bias
C. Status quo bias
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If the Fed purchases $50,000 in T-bills from a bank, by how much will the bank's excess reserves increase?
A) by $50,000 B) by $50,000 times the required reserve ratio C) by $50,000 divided by the required reserve ratio D) Not enough information has been provided to answer the question.
Exhibit 4-8 Demand and supply curves
In Exhibit 4-8, a movement from A to D is best described as a(n):
A. increase in the quantity demanded and an increase in supply. B. increase in supply and demand. C. increase in both the quantity demanded and supplied. D. increase in the quantity supplied and in the demand.
Non-discretionary fiscal policy designed to counteract a reduction in aggregate demand might include
A. a return to the gold standard. B. increased government spending on unemployment benefits. C. an increase in the money stock. D. all of the options are correct.
The theory of comparative advantage implies that
B. two countries can have a comparative advantage in production of the same good. C. the world gains from trade since it allows production to move to the countries where their opportunity cost is lowest. D. the country with the comparative advantage also has an absolute advantage.