Rationality in the household decision-making process means that
a. all households make the same decisions
b. everyone in the household agrees on all decisions
c. households act in their own best interests
d. households want to earn as much income as possible
e. all households would make the same decisions given the same information on products qualities and prices
C
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Which of the following is not an assumption of the productions possibilities frontier?
a. A country produces only two goods or types of goods. b. Technology does not change. c. The amount of available resources does not change. d. There is a fixed quantity of money.
Refer to the diagram, in which Q f is the full-employment output. The shift in the aggregate demand curve from AD 3 to AD 2 could result from which of the following fiscal policy actions?
A. A tax reduction.
B. A tax reduction accompanied by an even larger reduction in government spending.
C. A tax increase accompanied by an even larger increase in government spending.
D. An increase in government spending.