What assumption about human motivation is made in economics? Explain
What will be an ideal response?
Economists assume that people act as if motivated by self-interest. People respond predictably to opportunities for gain. That is, people look out for their own self-interest and do so in a rational manner.
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Exchange Rates
When an economy is experiencing a negative output gap, it means that the:
A. actual output is more than their potential output. B. price level is falling. C. price level is rising. D. actual output is less than their potential output.
All of the following are surplus items in the balance of payments EXCEPT
A) purchases of foreign assets. B) exports of merchandise. C) foreign tourist expenditures. D) funds deposited in this country by foreign residents.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point A to Point E, the opportunity cost of motorcycles, measured in terms of hybrid cars
A. remains constant. B. decreases. C. initially increases, then decreases. D. increases.