Suppose that an economics professor selects two students, Audrey and Michael, to participate in a classroom experiment. The professor gives Audrey twenty $1 bills. Audrey must pick an allocation of the twenty $1 bills to offer to Michael. If Michael accepts the allocation, each student keeps his or her portion of the money. If Michael rejects the allocation, the professor keeps the $20, and each
student receives nothing. Audrey selects $19 for herself and $1 for Michael. Based on the studies of human decision making, which of the following statements is correct?
a. If Michael accepts the offer, he is behaving rationally.
b. If Michael rejects the offer, he may value fairness more than $1.
c. If Michael rejects the offer, Audrey made a bad choice by trying to keep $19 for herself.
d. Any of the above could be correct.
d
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Deliberate manipulation of government spending and taxes to promote macroeconomic goals is known as _____
Fill in the blank(s) with the appropriate word(s).
Suppose a consumer only purchases food and clothing, and food is plotted along the horizontal axis of the consumer's indifference map. If the price of food and clothing increase and income does not change, then the budget line changes by rotating:
A) counter-clockwise about the fixed vertical axis intercept. B) clockwise about the fixed vertical axis intercept. C) counter-clockwise about the fixed horizontal axis intercept. D) clockwise about the fixed horizontal axis intercept. E) none of the above
The international trade response to a contractionary monetary policy will cause aggregate demand to shift ____ and aggregate supply to shift ____
a. outward, outward b. inward, outward c. outward, inward d. inward, inward
If, with one unit of labor, the U.S. can produce 20 units of computer software and 10 units of computer hardware, and China can produce 6 units of software and 4 units of hardware, then
A. the United States has a comparative and absolute advantage in both goods. B. China has a comparative advantage in hardware and the U.S. has a comparative advantage in software. C. China has a comparative and absolute advantage in both goods. D. the United States has a comparative advantage in both goods.