"Economists assume people are selfish." Do you agree with this statement or not? Explain
What will be an ideal response?
Economists do not assume people are selfish, although clearly some people are. Self-interest does not necessarily mean selfishness. People have many goals, some of which may be self-centered and some of which may be more altruistic. Charity is consistent with self-interested behavior.
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If demand pull inflation occurs when the economy is already at potential GDP, then following the initial increase in aggregate demand, the
A) AS curve shifts rightward. B) potential GDP line shifts rightward. C) AS curve shifts leftward. D) potential GDP line shifts leftward. E) None of the above is correct because demand-pull inflation shifts only the aggregate demand curve.
If the cross elasticity of demand for good x with respect to the price of good y is positive, then goods x and y are
A) normal goods. B) inferior goods. C) complements. D) substitutes.