The Fallacy of Composition Is the Incorrect View That

question 221

Multiple Choice

The fallacy of composition is the incorrect view that

• A) decisions are always made at the margin.
• B) incentives matter only to those who behave selfishly.
• C) if something is true for an individual, then it must also be true for the group.
• D) the value of a good can be objectively measured by its cost of production.

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Definitions:

Budget Deficits

The situation where a government's expenditures surpass its revenues within a specified period, leading to a shortfall that requires borrowing.

1930s

refers to the decade known for the Great Depression, a severe worldwide economic downturn that lasted from 1929 to 1939.

Economic Behaviorists

Scholars or researchers who study how psychological and emotional factors affect the economic decisions of individuals or institutions.

Supply Side Economists

Economists who believe in the effectiveness of policies that focus on boosting output and economic growth by increasing the supply of goods and services, often through tax cuts and deregulation.