The theory of bounded rationality, based on rules of thumb such as "the value of a product is indicated by its price," may result in:
A. diminishing marginal utility.
B. an upward-sloping supply curve.
C. an upward-sloping demand curve.
D. constant marginal utility.
Answer: C
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The part of a commercial bank's reserves that are larger than desired are called
A) additional reserves. B) required reserves. C) excess reserves. D) nonrequired reserves. E) unnecessary reserves.
If the economy is growing 3% a year and the government increases the ratio of interest on the national debt to GDP, we may conclude that
A) the output ratio will fall. B) additional interest payments exceed 3% of GDP. C) tax revenues will fall. D) the Laffer curve will be inoperable.
In a floating exchange rate system, an appreciation of the exchange rate could be caused by
a. a cut in taxes. b. a decrease in government spending. c. an increase in the domestic money supply. d. a decrease in the foreign demand for U.S. goods.
The total social costs of production are:
a. private costs plus private benefits. b. private benefits minus private costs. c. private costs plus external costs d. private costs minus external costs.