Economists use models in order to
A. experiment with alternative circumstances.
B. make educated guesses about real-life events.
C. predict outcomes under various hypothetical conditions.
D. increase understanding of how a relationship actually works.
E. All of these responses are correct.
Answer: E
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What effect did the decrease in the value of the dollar have on the U.S. trade deficit in the period from 2006 to 2009?
A. It decreased the trade deficit as Americans bought more U.S. capital goods. B. It decreased the trade deficit as foreigners were attracted to the increased value of U.S. products and Americans bought fewer imports. C. It increased the trade deficit as U.S. investors bought more domestic financial assets. D. It increased the trade deficit as Americans bought more imports and foreigners bought fewer U.S. products.
The exchange rate of a currency in a black market:
A) will be less favorable to sellers of domestic currency than the official exchange rate. B) will be more favorable to sellers of domestic currency than the official exchange rate. C) will be more favorable to both the sellers and the buyers of domestic currency than the official exchange rate. D) will be less favorable to both the sellers and the buyers of domestic currency than the official exchange rate.
The market demand for The Federalist Papers is likely to be more elastic than the market demand for a best-selling mystery novel
Indicate whether the statement is true or false
The ________ interest rate more accurately reflects the true cost of borrowing
A) nominal B) real C) discount D) market