Regarding economic models, which of the following statements is NOT true?
A. An economic model is a simplified representation of a theory or part of a theory.
B. An economic model can provide clear answers for policy makers.
C. An economic model can clarify an important economic problem.
D. An economic model can show three-variable diagrams.
Answer: B
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A boss can type 200 words per minute and sell 2000 units of the company's product in one day. His assistant can type 150 words per minute and sell 1000 units of the company's product in one day. Discuss who has absolute and comparative advantages in the "production" of typing and selling.
What will be an ideal response?
Minimax Motors, a car manufacturer, can produce 1,200 cars per week in its new plant that has 25 assembly lines and 450 workers. If Minimax Motors adds 50 new workers to their plant, it can produce 1,300 cars per week. This decrease in average productivity occurs because of: a. diminishing marginal returns of workers
b. diminishing marginal returns of assembly lines. c. diminishing marginal returns of both workers and assembly lines. d. diminishing marginal returns of the management team.
When Roxanne, a U.S. citizen, purchases a designer dress from Barneys of New York that was made in Milan, the purchase is
A) both a U.S. and an Italian import. B) a U.S. import and an Italian export. C) a U.S. export and an Italian import. D) neither an export nor an import for either the United States or Italy.
An inflation shock that shifts the short-run aggregate supply curve leftward and leaves the long-run supply curve unchanged means the economy's potential level of output will:
A. increase. B. decrease. C. decrease only if monetary policymakers do not respond. D. not change.