Humans and Other Animals Display a Non-Rational Set of Rules

question 49

Multiple Choice

Humans and other animals display a non-rational set of rules when entering economic transitions, suggesting that factors other than traditional logic come into play. In fact, both humans and pigeons prefer _____ over _____

• A) cooperation, defection
• B) heuristics, reason
• C)immediate gains, delayed rewards
• D) social decisions, logical decisions

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Definitions:

Price Level

The calculated average price across the broad spectrum of goods and services in an economy.

Investment Spending

Expenditure on capital goods used to produce other goods and services in the future.

Consumption Function

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

Marginal Propensity to Save

The fraction of an increase in income that is saved by an individual or population, representing how savings change with changes in disposable income.