One major consequence of the framing effect is that:
A. People may spend more to insure themselves against rare events, but leave themselves uninsured against more common events
B. Someone could persist in pursuing a failed policy despite overwhelming evidence of the failure
C. Major business projects may create bottlenecks in the organization because they are not completed as scheduled
D. Decision-makers may make faulty decisions if they are lulled by the environment in which they are making their decisions
D. Decision-makers may make faulty decisions if they are lulled by the environment in which they are making their decisions
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Inflation caused by a rise in the prices of inputs is referred to as ________.
A. hyperinflation B. unexpected inflation C. demand-pull inflation D. cost-push inflation
The ______________ is the amount by which one input can be reduced when one more unit of another input is added while holding the output constant.
Fill in the blank(s) with the appropriate word(s).
Assume the current interest rate on a one-year bond is 7%, and the interest rate investors expect on the one-year bond one year from now is 3%
According to the expectations hypothesis, the current interest rate (per year) on a two-year bond should be A) 3%. B) 5%. C) 7%. D) 10%.
Which of the following describes a situation in which demand must be elastic?
a. The price of pens rises by 10 cents, and quantity of pens demanded falls by 50. b. The price of pens rises by 10 cents, and total revenue rises. c. A 20 percent increase in the price of pens leads to a 20 percent decrease in the quantity of pens demanded. d. Total revenue does not change when the price of pens rises. e. Total revenue decreases when the price of pencils rises.