The assumption that people act in their best self-interest means people
a. do what gives them the greatest benefits at the lowest costs.
b. are selfish.
c. do what gives them the smallest benefits at the greatest costs.
d. are irrational.
a. do what gives them the greatest benefits at the lowest costs.
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A(n) _______ does not pose the problem of scarcity; one use of the good is not an alternative to another use.
A) free good B) scarce good C) economic good D) monetary good
Refer to Figure 26-11. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues no policy, then at point B
A) the unemployment rate is very, very low. B) incomes and profits are rising. C) firms are operating above their normal capacity. D) the economy is below full employment. E) there is pressure on wages and prices to rise.