Answer the following statement true (T) or false (F)
1) Both neoclassical and behavioral economics believe that people are mostly rational in both
their decision making and their actions.
2) Behavioral economists believe that while people try to make rational decisions, they are
frequently subject to systematic errors.
3) Behavioral economics recognizes that people frequently make errors, but these errors
generally cancel out in such a way that neoclassical models are sufficient for predicting economic outcomes.
4) Neoclassical and behavioral economics are generally complementary.
1) F
2) T
3) F
4) T
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Refer to Tax Problem. If the government imposes a $10 per unit consumption tax, then how much consumer surplus will there be after the tax.
Consider a perfectly competitive market were demand is Q = 100 - P and Supply is Q = P - 10. a. 600. b. 800. c. 1000. d. 1600.
Which of the following is an appropriate fiscal policy response to high inflation?
a. increase interest rates b. increase government purchases c. decrease taxes d. none of the above
Which statement about U.S. poverty rates is true?
a. Poverty rates decreased during the 1960s. b. Poverty rates were at their lowest in 2011. c. Poverty rates increased during the 1970s. d. Poverty rates decreased significantly in 2013.
The following is an example of the moral-hazard problem: Homebuyers do not properly evaluate the risks involved in buying a home, because they are assuming the government will bail them out of a bad mortgage as it has done before.
Answer the following statement true (T) or false (F)