When some people do not act rationally, others can profit from that irrationality.
Answer the following statement true (T) or false (F)
True
Irrational behavior means that something was not maximized, and the extra amount not obtained by that behavior allows for opportunities for profit.
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How are final goods and services valued when measuring nominal GDP?
A) at producer cost B) at base year prices C) at foreign exchange parity D) at current market prices E) at factor market prices
Assuming the economy in the graph shown is currently at equilibrium A, if the government wanted to enact a policy it would likely enact:
A. expansionary fiscal policy in an effort to move aggregate demand to the right.
B. contractionary fiscal policy in an effort to move aggregate demand to the left.
C. expansionary fiscal policy in an effort to move aggregate demand to the left.
D. contractionary fiscal policy in an effort to move aggregate demand to the right.
Ben N. Jerry prefers to keep his $10,000 retirement savings buried in the backyard. After an increase in the price level, Ben reduces the amount of goods and services he wants to purchase. Ben's rationalization, that now his retirement savings won't buy as much, is consistent with which explanation of the aggregate demand curve's negative slope?
a. the interest rate effect b. the open economy effect c. the inflation effect d. the wealth effect
If unemployment and inflation move inversely, then we can infer that business fluctuations are
a. from the demand side. b. from the supply side. c. from both the demand and supply side. d. purely random events.