One reason economists began to look at more effective coordination mechanisms is that they began to:
A. focus more on the assumption that people are rational.
B. focus more on people's predictably irrational behavior.
C. rely more heavily on deductive reasoning.
D. use advanced calculus in their models.
Answer: B
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A) must increase the demand for money. B) might increase or decrease the demand for money. C) must decrease the demand for money. D) affect only the supply of money. E) have no effect on the demand for money or on the supply of money.
If a constant-growth-rate-of-money policy is to achieve constant growth of nominal GDP, velocity
A) does not matter since the money supply is growing steadily. B) must grow at a steady and predictable rate. C) must be constant. D) must shrink over time at the same rate as money grows.