Traditional economic models highlight social dimensions of economic problems.
Answer the following statement true (T) or false (F)
False
Traditional models, unlike behavioral models, are based on the assumptions of rational behavior and self-interest. Social dimensions are not a core part of the traditional model.
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Which of the following scenarios would cause an outward shift in the production possibilities curve?
a. temporary shutdown of mines due to frequent accidents b. discovery of large mineral deposits c. tougher environmental legislation d. shortage of skilled labor
Suppose we were analyzing the pound per Swiss franc foreign exchange market. If Switzerland's tax level rises relative to England and nothing else changes, then the:
a. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing an appreciation of the Swiss franc. b. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing a depreciation of the Swiss franc. c. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market rises, causing an uncertain change in the value of the Swiss franc. d. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market rises, causing an appreciation of the Swiss franc. e. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate.
What did Adam Smith perceive was primarily responsible for improving standard of living?
What will be an ideal response?
Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all of its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y. We can conclude that:
A. the terms of trade will be 3X equals 1Y. B. Alpha should specialize in Y and Beta in X. C. Alpha should specialize in X and Beta in Y. D. there is no basis for mutually beneficial specialization and trade.