Which of the following is not a common mistake made by consumers?
A) the failure to ignore sunk costs
B) being overly pessimistic about their future behavior
C) the failure to take into account the implicit costs of an activity
D) being overly optimistic about their future behavior
B
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If real GDP is $10 trillion and the velocity of circulation is 2, the quantity of money
A) is $2 trillion. B) is $5 trillion. C) is $20 trillion. D) cannot be determined from the information given.
If a reform of the tax laws encourages greater saving, the result would be
a. higher interest rates and greater investment. b. higher interest rates and less investment. c. lower interest rates and greater investment. d. lower interest rate and less investment.
How will the exchange rate (foreign currency per dollar) respond to an increase in the relative rate of productivity growth in Canada in the long run?
A) Exchange rates will rise. B) Exchange rates will fall. C) Exchange rates will be unaffected by changes in the relative rate of productivity growth in Canada, both in the short run and in the long run. D) The exchange rate will be affected in the short run, but not in the long run.
If the Fed's policy reaction function equals r = .02 + ?, where r is the real interest rate and ? is the inflation rate. If the real rate of interest is set at 5 percent, then the rate of inflation must be:
A. 4 percent. B. 2 percent. C. 3 percent. D. 1 percent.