Stagflation occurs when aggregate supply and aggregate demand both increase

Sara looks into her closet and discovers a pair of like-new shoes she no longer wears because they give her blisters. From the economist's perspective, was Sara behaving rationally when she bought those shoes?

A) No. If any of a person's decisions have poor results, that person is irrational. B) Yes, as long as Sara didn't intentionally purchase blister-causing shoes. C) No. The rationality assumption states that rational people never make mistakes. D) It's not clear because psychology, not economics, deals with the rationality assumption.

Which of the following forms of taxation accounts for the largest share of taxes received by state and local governments?

A) sales, excise, and gross receipts taxes B) personal and corporate income taxes C) license and permit fees D) property taxes