Must a rational choice always work out well? In other words, is it possible for someone to regret a rational decision?
What will be an ideal response?
It is not necessarily the case that a rational choice always works out well; sometimes people will come to regret a rational decision. Decisions are made based on the information at hand. Sometimes that information is incomplete. For instance, when faced with a math midterm on Thursday, on Wednesday night a student might believe that he or she has a strong grasp of the subject and hence rationally decide to go to a movie rather than study. When the test reveals that the student actually understood little about the math and the student earns a low score, he or she likely regrets not studying. But the regret does not imply that the decision to see the movie was irrational.
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Refer to Figure 17-5. Consider the Phillips curves shown in the above graph. We can conclude from this graph that
A) the expected rate of inflation in this economy is 10 percent. B) ceteris paribus, a fall in the rate of inflation to 5 percent will increase unemployment to 7.5 percent in the short run. C) the natural rate of unemployment in this economy is 5.5 percent. D) All of the above are correct.
If the cost of capital increases the isocost line will
A) stay the same. B) shift outward in parallel fashion. C) rotate inward around the point where only labor is employed in production. D) shift inward in parallel fashion.
When the Federal Reserve sells securities on the open market it drives bond prices ____ and drives interest rates ____.
A. up; up B. down; down C. up; down D. down; up
An e-book that sells new for $100 will typically be sold back to the bookstore "used" for
A. $100. B. $75. C. nothing (it can't be re-sold). D. $50.