Behavioral economists focus on the assumption that
A) consumers have limitations that prevent them from examining all possible choices when they make decisions.
B) consumer behavior cannot be predicted by economics.
C) consumers are irrational and so they do not seek to maximize utility.
D) consumer choice is perfectly predictable by basic economic theory.
Answer: A
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Explain two ways by which the Federal Reserve System can increase the monetary base. Why is the effect of Federal Reserve actions on bank reserves less exact than the effect on the monetary base?
What will be an ideal response?
The terms "long-run view" and "classical view" can be used interchangeably
a. True b. False
The monopolistically competitive firm's economic profits tend toward zero in the long run. Why is this so?
A) Monopolistically competitive firm's are rarely able to maintain the corporate discipline necessary to sustain profits in the long run. B) If a monopolistically competitive firm is profitable for more than 2 years, the Justice Department orders a corporate restructuring to pull the company back to a normal rate of return. C) In the long run, other firms will successfully offer substitutes for the profitable firm's product, and competition will eliminate economic profits. D) Even though the monopolistically competitive firm can successfully maintain barriers to entry, keeping competition at bay becomes very expensive.
A depreciation of the U.S. dollar will encourage, other things the same ________
A) the purchase of foreign goods by foreign economic agents B) the purchase of foreign goods by U.S. economic agents C) the purchase of U.S. assets by foreign economic agents D) the purchase of foreign assets by U.S. economic agents