Your friend tells you that her dad just suffered from a stroke because his blood pressure and cholesterol were too high. You know that your own father also has high blood pressure so you become worried that he will also have a stroke. This is an example of which systematic mistake that people make?

Consider the demand curves for soft drinks shown in the figure above. Moving from point a to point c means that

A) the marginal benefit of each additional soft drink falls. B) the opportunity cost of another soft drink increases. C) people's incomes have decreased. D) the price of a soft drink has increased.

An effort by the Fed to reduce aggregate demand may be thwarted because

A) investment could remain the same or increase because of optimistic expectations by businesses about the future of the economy. B) investment and interest rates are positively related. C) investment could fall because of pessimistic expectations. D) taxes may have been increased.