The objective of an economic model is to
a. be an accurate description of reality
b. yield better understanding of important relationships
c. use simplifying assumptions to make positive economic statements
d. use basic principles of economics to derive fundamental assumptions about human behavior
e. predict real-world occurrences with complete accuracy
B
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A vertical demand curve has
A) infinite elasticity. B) positive elasticity. C) zero elasticity. D) negative elasticity.
Refer to Exhibit 6-2. The labor force participation rate in year 3 is
a. 12 1/2 percent. b. 70 percent. c. 80 percent. d. 30 percent. e. 50 percent.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y1. C. P3 and Y1. D. P3 and Y2.
Which of the following concerns is consistent with the Fed's policy initiative outlined in the In the News article titled " U.S. Federal Reserve Cuts Interest Rates to Historic Low"?
A. Concern about the lower interest rates harming the economy. B. Concern about inflationary pressures on the economy. C. Concern about mounting unemployment. D. Concern about desired spending exceeding current output.