When Studying Individuals' Economic Behavior, Economists Assume That

question 275

Multiple Choice

When studying individuals' economic behavior, economists assume that

• A) individuals understand the rationale for all their actions.
• B) individuals act as if they were rational.
• C) only educated people act as if they were rational.
• D) self-interest is of limited relevance in predicting an individual's actions.

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Definitions:

Flood Control

Measures and strategies implemented to manage water levels and reduce the risk and impacts of flooding.

Tennessee Valley Authority

A federally owned corporation in the United States created in 1933 to provide navigation, flood control, electricity generation, and economic development to the Tennessee Valley, a region particularly affected by the Great Depression.

Invisible Hand

A concept introduced by Adam Smith to describe the self-regulating nature of the market economy driven by individuals' pursuit of their own self-interest.

Government Involvement

The extent to which the government intervenes in the economy, which can range from regulation and tax policy to direct control or ownership of businesses.