When economists talk about a "new normal" in terms of conditions in the production and employment sectors, they are suggesting a change in people's perceptions influenced by the:
A. Hindsight bias
B. Confirmation bias
C. Availability heuristic
D. Framing effect
D. Framing effect
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People interpret evidence to confirm beliefs they already hold. This statement is an example of which of the following systematic mistakes that people make?
a. people are overconfident b. people give too much weight to a small number of vivid observations c. people are reluctant to change their minds d. All of the above are correct.
Which of the following statements is FALSE?
A) Economists empirically test their models. B) Economic models are not used to make predictions. C) An economic model should capture only the key relationships that are sufficient to analyze the particular problem being studied. D) Economic models relate to behavior rather than to individual thought processes.
Use the graph below to explain the inflationary expenditure gap.
What will be an ideal response?
The deadweight loss with perfect price discrimination is
A) equal to the deadweight loss of a single-price monopoly. B) sometimes less than and sometimes more than the deadweight loss of a single-price monopoly. C) more than the deadweight loss of a single-price monopoly. D) zero. E) larger than the deadweight loss with perfect competition.