Why Might the Economy as a Whole Conform to the Predictions

question 69

Multiple Choice

Why might the economy as a whole conform to the predictions of a model even if not all people are rational?

• A) The standard model doesn't assume rationality.
• B) People who are rational will profit from those who are not.
• C) People who are irrational will profit from those who are not.
• D) It won't; for the standard model to work, all people must be rational.

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Definitions:

Bank Credit Cards

Financial tools issued by banks that allow cardholders to borrow funds within a pre-approved limit for purchases or cash withdrawals.

Fees

Charges levied for services provided, often related to professional, financial, or administrative tasks.

Factoring Receivables

The financial transaction of selling accounts receivable to a third party (factor) at a discount to obtain immediate cash.

Factor

An element or component that contributes to a particular result or situation.