Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in domestic stock markets more risky than investing in foreign stock markets, and therefore choose to invest in foreign markets.By using all available information as they act to achieve their goals, these investors are exemplifying the economic idea that
A)people are rational.
B)people respond to economic incentives.
C)optimal decisions are made at the margin.
D)equity is more important than efficiency.

Question

Quizplus · Accepted Answer

The investors in this scenario are acting upon their perceived increased risk in domestic stock markets and are making a rational decision to invest in foreign markets instead. This aligns with the economic concept that people are rational and make decisions based on all available information to achieve their goals.

Suppose That Some Investors Have Decided That Economic and Financial