Refined Economics Irrational Behavior Test - 87+ MCQs: Economics - Irrational Behavior Quiz: Explore the Unpredictable Aspects of Economic Decision-Making

1. How does 'Gini Coefficient' measure income inequality?

Higher coefficient indicates lower inequality

Lower coefficient indicates lower inequality

Zero coefficient indicates perfect equality

Coefficient measures wealth, not income, inequality

2. What is the 'Laffer Curve' used to illustrate in the realm of taxation?

Positive correlation between tax rates and government revenue

Negative correlation between tax rates and government revenue

Consistent government revenue regardless of tax rates

Impact of tax rates on consumer behavior

3. In economics, what characterizes a 'Public Good'?

Excludability and rivalry

Non-excludability and non-rivalry

Excludability and non-rivalry

Non-excludability and rivalry

4. What does 'Game Theory' study in the context of decision-making?

Solo decision-making processes

Strategic interactions among rational decision-makers

Random decision-making

Historical decision-making patterns

5. What is the 'Veblen Effect' in microeconomics?

Increase in demand as price decreases

Decrease in demand for luxury goods

Positive correlation between price and demand

Enhanced desirability of a good due to higher price

6. In the context of irrational behavior, what does 'Bounded Rationality' refer to?

Unlimited cognitive capacity in decision-making

Perfectly rational decision-making

Decision-making within the limits of available information and cognitive resources

Random decision-making

7. What characterizes the 'Sunk Cost Fallacy,' and how does it contribute to irrational decision-making?

Believing in a streak of success or failure

Preferring inferior goods

Having no impact on decision-making

Continuing an endeavor due to past investments

8. How does 'Gini Coefficient' measure economic inequality?

It measures total income in an economy

It quantifies the gap between rich and poor

It evaluates government intervention in the economy

It assesses the overall economic growth

9. How does 'Rational Expectations Theory' differ from other theories of expectations?

It assumes individuals always have accurate expectations

It dismisses the role of expectations in decision-making

It emphasizes the role of biased expectations

It supports random expectations

10. What impact does the 'Status Quo Bias' have on decision-making?

Encourages dynamic decision-making

Resistance to change from the current state

Promotes risk-taking behavior

Balances opposing viewpoints

11. How does 'Scarcity' impact decision-making in economics?

Ensures unlimited resources for everyone

Leads to overproduction of goods

Requires no economic choices

Forces choices due to limited resources

12. What is the 'Broken Window Fallacy' in economic reasoning?

Belief that destruction stimulates economic growth

Theory that broken windows create job opportunities

Idea that visible economic activity is always beneficial

Misinterpretation of supply and demand dynamics

13. What is 'Hyperinflation' in the context of macroeconomics?

Moderate and controlled inflation

Inflation exceeding 10% annually

Elevated and rapidly increasing inflation

Deflationary pressures on the economy

14. How does the 'Tversky and Kahneman Framing Effect' demonstrate the influence of presentation?

It supports objective decision-making

It highlights the importance of body language

It showcases that the way information is presented influences decisions

It proves the law of supply and demand

15. What characterizes a 'Mixed Economy'?

Government ownership of all means of production

Private ownership of all means of production

Limited government intervention in economic affairs

Centralized economic planning

16. In the context of economic elasticity, what does a high price elasticity of demand indicate?

Small change in quantity demanded for a large change in price

Large change in quantity demanded for a small change in price

No change in quantity demanded regardless of price

Decrease in both price and quantity demanded

17. What role does the 'Ultimatum Game' play in understanding irrational behavior?

A game theory experiment to study bargaining and fairness

A stock market simulation

A model for efficient market hypothesis

A measure of inflation rates

18. How does 'Supply and Demand' determine market prices in a competitive economy?

Government intervention sets prices

Random fluctuations in prices

The interaction of buyers and sellers

Prices are fixed by sellers

19. In the context of economic anomalies, what does a high price elasticity of demand indicate?

Small change in quantity demanded for a large change in price

Large change in quantity demanded for a small change in price

No change in quantity demanded regardless of price

Decrease in both price and quantity demanded

20. What does the 'Laffer Curve' depict in fiscal policy?

Inverse relationship between tax rates and tax revenue

Direct relationship between government spending and GDP

Impact of interest rates on investment

Optimal level of government debt