The role of an assumption in an economic theory is to:
A. Add realism
B. Prove the theory
C. Cover special cases
D. Simplify the complex reality
Answer: D
You might also like to view...
Discuss the major determinants of net exports
In 2007, the value of the American dollar rose relative to the euro
a. True b. False Indicate whether the statement is true or false
Who said, "It is not the employer who pays wages; he only handles the money. It is the product that pays wages."
A. Henry Ford B. Karl Marx C. Jackson Martindell D. Studs Terkel
Answer the next question on the assumption that the legal reserve ratio is 20 percent. Suppose that the Fed sells $500 of government securities to commercial banks buys $500 of securities from individuals, who deposit the cash in checking accounts.
As a result of the above transactions, reserves in the banking system will: A) remain unchanged B) rise by $100 C) fall by $100 D) rise by $1000