A large and diverse community has suffered a two-month drought.
In attempting to deal with the crisis, four identifiable groups emerge: one decides to pray, a second decides to engage in a rain dance, a third decides to use modern meteorological principles and seed the clouds, and a fourth decides to do nothing. From the standpoint of economic theory, A) individuals in the first and second groups are acting irrationally and inefficiently.
B) individuals in each group are acting efficiently, given their own values and understanding of ends and means.
C) the third group is the smartest.
D) the fourth group is the most selfish.
Question 2
Reasons that the recession of 2008-2009 did not become a depression include:
i. The Fed bailed out troubled financial institutions.
ii. The government aggressively balanced its budget.
iii. The government increased its expenditures, which increased aggregate demand.
A) i only
B) ii only
C) iii only
D) i and iii
E) i and ii
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