The purpose of making assumptions in an economic model is to
A) force the model to yield the correct answer.
B) minimize the amount of work an economist must do.
C) simplify the model while keeping important details.
D) express the relationship mathematically.
C
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List and briefly describe the five factors of production
What will be an ideal response?
The time inconsistency of policy implies that
a. what policymakers say they will do is generally what they will do, but people don't believe them because of current policy. b. when people expect that inflation will be low, it is harder for the Fed to increase output by increasing the money supply. c. people will believe Fed policy will be more inflationary than the Fed claims. d. what policymakers say they will do is usually not what they do, but people believe them anyway.
As long as output increases
A) average total costs decrease. B) average variable costs decrease. C) average fixed costs decrease. D) marginal costs decrease.
The process of dividing a nominal quantity by a price index in order to express the quantity in real terms is called:
A. negative inflation. B. indexing. C. depressing. D. deflating.