An economic model:
A. should include all possible details.
B. will never use simplifying assumptions.
C. always accurately predict cause and effect.
D. should make clear assumptions.
Answer: D
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Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________. 
A. Rising; A B. Falling; A; C C. Falling; B: C D. Rising; A; C
If the required reserve ratio is 15 percent, the simple deposit multiplier is
A) 15.0. B) 1.5. C) 6.67. D) 3.33.
From the Keynesian perspective, an increase in cyclical unemployment during a recession represents
A) an equivalent increase in the natural rate of unemployment. B) a roughly equal mix of voluntary and involuntary unemployment. C) involuntary unemployment. D) a decrease in the number of discouraged workers in an economy.
A bank's assets consist of $500,000 in total reserves, $1,600,000 in loans, and a building worth $1,200,000 . Its liabilities and capital consist of $2,000,000 in demand deposits and $1,300,000 in capital. If the required reserve ratio is 20 percent, what is the level of the bank's excess reserves? How much could it loan out as a result?
a. $100,000; $100,000 b. $100,000; $400,000 c. $400,000; $500,000 d. $400,000; $2,000,000