One reason why economists often use models in their analysis is that
A) a model helps us to understand, explain, and predict economic phenomena in the real world.
B) a model accurately pictures every detail of the real world economy.
C) a model relates to individual thought processes rather than behavior.
D) it is relatively easy to perfectly specify a model.
Answer: A
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Risk aversion is best explained by
a. timidity. b. increasing marginal utility of income. c. constant marginal utility of income. d. decreasing marginal utility of income.
The labor-supply curve is affected by the trade-off between labor and leisure
a. True b. False Indicate whether the statement is true or false
The difference between M1 and M2 is that:
A. the former includes time deposits. B. the latter includes small-denominated time deposits, noncheckable savings accounts, money market deposit accounts, and money market mutual fund balances. C. the latter includes negotiable government bonds. D. the latter includes cash held by commercial banks and the U.S. Treasury.
The amount the government owes to the public is the deficit.
Answer the following statement true (T) or false (F)