The Rationality Assumption Says That

question 121

Multiple Choice

The rationality assumption says that

• A) people do not intentionally make decisions that would leave them worse off.
• B) people never make decisions that would leave them worse off.
• C) people do not respond to incentives since incentives require scarce resources.
• D) all economic analysis must be normative.

---

Definitions:

Major Industries

The leading sectors of an economy, characterized by their significant impact on employment, innovation, and overall economic growth.

Junk Bond Market

The junk bond market refers to the segment of the bond market that deals with high-yield, high-risk bonds with lower credit ratings than investment-grade.

Late 1980s

The late 1980s refer to the period from 1985 to 1989, often remembered for significant economic, cultural, and technological developments.

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in real GDP, income, employment, industrial production, and wholesale-retail sales.