Economists Normally

question 150

Multiple Choice

Economists normally

• A)do not try to explain people's tastes,but they do try to explain what happens when tastes change.
• B)believe that they must be able to explain people's tastes in order to explain what happens when tastes change.
• C)do not believe that people's tastes determine demand,so they ignore the subject of tastes.
• D)incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements.

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Definitions:

Compounded Annually

Pertains to the calculation of interest on both the initial principal and the accumulated interest from previous periods, applied once per year.

Perpetuity

A financial instrument that pays a constant stream of interest payments indefinitely.

Compounded Monthly

Calculating interest on a principal sum along with any accumulated interest of the previous periods with each cycle occurring every month.

Trust Fund

A legal arrangement where assets are held by a trustee for the benefit of another person or group.