Economists Assume That Rational Behavior Is Useful in Explaining Choices

question 38

Multiple Choice

Economists assume that rational behavior is useful in explaining choices people make

• A)because irrational people do not make economic choices.
• B)even though people may not behave rationally all the time.
• C)because individuals act rationally all the time in all circumstances.
• D)even though people rarely, if ever, behave in a rational manner.

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Definitions:

Long-Term Notes

Debt securities with a maturity date longer than one year, representing borrowed funds that need to be repaid.

Fixed Rates

Interest rates that remain constant over the lifetime of a financial instrument, unaffected by market fluctuations.

Floating Interest

An interest rate that changes over the life of a loan or mortgage, based on the current market conditions or an index.

Solvency

The ability of an entity to meet its long-term debts and financial obligations.