The basic purpose of economic models is to:
a. construct simplifying assumptions about the real world.
b. explain reality in all its complexity.
c. construct situations where controlled experiments can be carried out.
d. provide explanations for, and predictions of the relationship between variables.
d
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A point beyond the boundary of an economy's production possibilities curve is: a. efficient
b. inefficient. c. attainable. d. unattainable.
Suppose that the total expenditures for a typical household in 2015 equaled $5,500 per month, while the cost of purchasing exactly the same items in 2017 was $6,875. If 2015 is the base year, the CPI for the year 2017 equals:
A. 1.20 B. 1.25 C. 1.00 D. 0.80
Which of the following is true under monopolistic competition in the short run?
A. P > MC. B. Profits are always zero. C. P = MR. D. All of the choices are true in monopolistic competition.
Explain the rational expectations hypothesis.
What will be an ideal response?