When Most Economists Wake Up in the Morning,their First Decision

question 72

Multiple Choice

When most economists wake up in the morning,their first decision is whether or not to hit the snooze bar on the alarm clock.What statement best represents their thought process as a rational decision-maker?

• A) I had a really late night grading exams, and I deserve 10 more minutes of sleep.
• B) The total amount of work I have to do today is rather small, so the total benefit to going to work for a full 8 hours is also small.
• C) The total amount of work I have to do today is rather small, so the marginal cost of going to work 10 minutes late is small.
• D) The total amount of work I have to do today is rather small, so the marginal benefit of sleeping 10 more minutes is rather large.
• E) The marginal benefit of sleeping 10 more minutes is greater than the marginal benefit of 10 more minutes of work.

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Definitions:

Fixed Exchange Rates

A government or central bank policy to maintain the country’s currency at a constant value relative to another currency or a benchmark.

Floating Exchange Rates

A currency valuation system where the value of a currency is determined by the foreign exchange market based on supply and demand relative to other currencies.

Gold Standard

A monetary system in which the value of currency is directly linked to gold, whereby currencies can be exchanged for a specific amount of gold.

Deflation

Deflation is an economic condition characterized by a general decrease in prices of goods and services, often indicating a reduction in the supply of money or credit.