Behavioral economics deals with
A. only theories without justification from empirical evidence.
B. bounded rationality.
C. unbounded willpower.
D. the assumption that people are always selfish.
Answer: B
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You are given the following consumption function C = 50 + .80YD. What is the amount of autonomous consumption expenditures?
A) 75 B) 100 C) 5 D) 50
Suppose the central bank announces that it will permanently increase the inflation rate and there is central bank credibility
With adaptive expectations, expectations of inflation will adjust ________, and with rational expectations, expectations of inflation adjust ________. A) slowly; slowly B) slowly; immediately C) immediately; immediately D) immediately; slowly
In the game in Scenario 13.14, each firm has a strategy that would not be chosen under any circumstances. This strategy is
A) Q = 50. B) Q = 100. C) Q = 150. D) "choose the same Q as the other player." E) "choose a Q different from the other player's."
An economic expansion caused by a shift in aggregate demand causes prices to
a. rise in the short run, and rise even more in the long run. b. rise in the short run, and fall back to their original level in the long run. c. fall in the short run, and fall even more in the long run. d. fall in the short run, and rise back to their original level in the long run.