Abstraction can be thought of as
a. ignoring reality in order to build theory.
b. omitting unimportant details in order to understand complex phenomena.
c. creating absurdity in order to explain simplicity.
d. assuming complexity when simplicity will do.
e. stylizing reality rather than analyzing cause and effect.
b
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A factor that would reduce the ability of the Social Security system to maintain current benefit levels with constant tax rates is
A. rapid real wage growth. B. reduced population growth. C. adoption of a “pay as you go” system. D. a slowdown in inflation.
In a perfectly competitive market a firm's rental rate for a machine (v) will be given by: v = P(r + d) where r is the prevailing rate of interest and d is the depreciation rate. In this formula P represents a. the present market price of the machine
b. the initial purchase price of the machine (assuming this differs from its present market price. c. the price of the firm's product. d. the depreciated value of the machine.
Which of the following correctly describes crowding out?
a. The displacement of interest-sensitive private investment that occurs when increased government deficit spending drives up interest rates. b. The potential for government spending to stimulate private investment in an otherwise sluggish economy. c. The displacement of poverty-stricken people from low-income assistance programs when outlays are reduced to balance the federal budget. d. The decline in market interest rates on account of increased fiscal spending on welfare programs.
The horizontal axis of the aggregate demand and aggregate supply graph has the
a) the price level as measured by the CPI. b) unemployment rate. c) the price level as measured by the GDP deflator. d) output of goods and services.