The theory of bounded rationality is consistent with which of the following?
A. It is irrational to follow principles such as "follow the leader."
B. It always pays to be irrational.
C. Our rationality depends on rules of thumb such as "you get what you pay for."
D. None of our decisions are rational.
Answer: C
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According to the Taylor, if there is an expansionary gap of 2 percent of potential output and inflation is 3 percent, what real interest rate will the Fed set?
A. 0.015 B. 0.02 C. 0.035 D. 0.025
Your Uncle Harry gives you stock in Samsung for your birthday. The stock is an example of:
A. foreign direct investment. B. foreign portfolio investment. C. importing. D. exporting.
When analyzing the housing market, the supply curve
a. will be upward sloping because the higher the price of a house the more that will exist b. will be horizontal to illustrate that the supply of housing is a stock variable c. will be downward sloping; that is what went wrong with the housing market d. will be vertical to illustrate that the supply of housing is a stock variable e. could be horizontal, vertical or upward sloping depending upon the housing market in question
Money serves as a basic yardstick for measuring economic value (a unit of account), allowing:
A. governments to restrict the issuance of private monies. B. people to hold their wealth in a liquid form. C. easy comparison of the relative prices of goods and services. D. goods and services to be exchanged with a double coincidence of wants.