When a person's expressed valuation of a product is affected by the numbers in their head, this is an important implication of:
A. mental accounting.
B. the decoy effect.
C. bundling.
D. the anchoring effect.
Answer: D
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Evaluate critically the following statement: The developed countries have all shown a significant increase in the numbers of university-trained workers as incomes have risen; thus the development of a solid university system should be among the
major priorities of developing countries.
Purchases of stocks and bonds are examples of investment spending
a. True b. False
Which of the following is not true about moral hazard?
A. It increases the difficulty of operating private insurance markets. B. It increases the difficulty of operating public insurance markets. C. It is the tendency of people to change behavior when insured. D. It is the tendency of people with higher risks to buy more insurance.
Suppose the MPC in the economy in Figure 10.2 equals 0.75 and the shift from AD0 to AD1 was caused by a decrease in investment of $50 billion. What will happen to the equilibrium level of real output as a result of the initial $50 billion decrease?
A. It will fall by exactly $200 billion. B. It will fall by more than $200 billion. C. It will fall by less than $200 billion. D. It will fall by less than $67 billion.