Question

Economists assume that rational people do all of the following exceptSuppose 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__________.

Answer 1

Answer:

people are rational

Explanation:

By using all available information as they act to achieve their goals, these investors are exemplifying the economic idea that people are rational

Rationality in the economic sense means that generally  people or investors will act in a way that will be judged as sensible, or reasonable.

By definition the economic rationality principle postulates that people will  consider options and decisions with logic of thought, as opposed to basing their decision on emotions, morals, or psychological elements.

Hence, if in the scenario, investors have decided that because of economic and financial uncertainty of investing in domestic stock markets which has made it more risky than investing in foreign stock markets, therefore they will invest in foreign markets; they are only being rational