Focal point equilibria definitely violate the principle of rational choice.
Answer the following statement true (T) or false (F)
False
The focal point equilibrium is arrived at from the rule of thumb "follow the leader." It does not violate the principle of rational choice because it can be costly to make decisions. This cost must enter into rational choice decisions.
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High net worth helps to diminish the problem of moral hazard problem by
A) requiring the state to verify the debt contract. B) collateralizing the debt contract. C) making the debt contract incentive compatible. D) giving the debt contract characteristics of equity contracts.
The monetarist assumption that monetary policy cannot change long-run equilibrium income is based on the idea that:
a. the long-run aggregate supply curve is horizontal. b. the long-run Phillips curve is vertical. c. the price level in the long run is fixed. d. the aggregate demand curve cannot shift. e. the long-run Phillips curve is upward-sloping.
Suppose your community is considering using public money to build a new sports stadium for the team that is already in the community but is likely to leave without a new stadium. Suppose you are watching a news broadcast in which the supporters are saying that it will enhance economic activity because of the increase in restaurant activity that will occur around the new stadium. Now suppose you hear that an independent economist is going to appear during the next segment. It is likely she will say
A. there will be no new economic activity created. B. it may be a short-term cost, but in the long term, it will be worthwhile. C. the economic activity created in the area will make it worth the investment. D. there will be no new economic activity created in net because the same amount of money will be spent in the city whether or not there is a team. It will simply substitute from the game to something else.
Refer to the information provided in Figure 3.14 below to answer the question(s) that follow.
Figure 3.14Refer to Figure 3.14. At a price of $90, there is an excess
A. supply of 450 sunglasses. B. demand of 150 sunglasses. C. demand of 600 sunglasses. D. supply of 600 sunglasses.