The optimization assumption suggests that people make
A. unpredictable decisions.
B. decisions without thinking very hard.
C. decisions to make themselves as well off as possible.
D. irrational decisions.
Answer: C
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
Which of the following statements correctly differentiates between a model and a hypothesis?
A) Testing a hypothesis does not require data, whereas testing a model requires data. B) A model is a simplified representation of reality, whereas a hypothesis is a model's predictions. C) A hypothesis can be used to make predictions for the future, whereas a model can only explain the past. D) Testing a model requires data, whereas testing a hypothesis does not require data.
The relationship between the market system and private property is
a. as the market system expands, private property declines in that society. b. private property rights interfere with the operation of the market system. c. the market system functions best when the rights of private property are protected. d. None of these.
An approach that can be taken by someone directly involved in a transaction to solve the problems caused by information asymmetry is:
A. statistical discrimination. B. mandating that information be shared. C. proofing. D. All of these are ways to solve information asymmetry.