When Comparing the Standard Models in the Respective Fields of Economics

question 47

Multiple Choice

When comparing the standard models in the respective fields of economics and psychology,it is clear that:

• A) both economists and psychologists always assume that people behave in a fully rational way.
• B) both economists and psychologists always assume that people do not act in a fully rational way.
• C) neither economists nor psychologists always assume that people behave in a fully rational way.
• D) economists generally assume that people behave in a rational way, whereas psychologists generally do not assume this.
• E) psychologists generally assume that people behave in a rational way, whereas economists generally do not assume this.

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Definitions:

Aggregate Income

The total amount of income generated by all individuals and entities in an economy over a specific period.

Aggregate Consumption

Aggregate consumption is the total amount of goods and services consumed in an economy, reflecting overall consumer spending.

Consumption Function

An economic formula representing the functional relationship between total consumption and gross national income.

Aggregate Income

The total income earned by all individuals and entities within an economy.