"Mediocre economists often consider only the immediate apparent effects of a change, whereas a good economist will also consider effects that may only become observable over time." This statement most clearly emphasizes
a. the fallacy of composition.
b. economizing behavior.
c. the importance of secondary effects.
d. the fact that association is not causation.
C
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When nominal interest rates are held below inflation rates, then households will have an incentive to
A. consume. B. save. C. purchase financial assets. D. postpone current consumption plans.
In the above figure, if the firm increases its output from Q2 to Q3, it will
A) reduce its marginal revenue. B) increase its marginal revenue. C) decrease its profit. D) increase its profit.
Which of the following best describes a situation of economic efficiency?
A. A firm produces to the point at which MR = AFC, with P = AVC. B. A firm produces to the point at which P = AVC, with MR < MC. C. A firm produces to the point at which P = ATC, with MC < MR. D. A firm produces to the point at which MR = MC, with P = MC.
According to the equation of exchange, if velocity and real GDP do not change, a 3 percent increase in the quantity of money
A) raises the price level by 3 percent. B) raises the price level by 3 ÷ (velocity). C) raises the price level by less than 3 percent. D) lowers the price level by 3 ÷ (real GDP). E) lowers the price level by 3 percent.