Models should:
A. not be applied to microeconomics.
B. attempt to include every detail of the situation being studied.
C. describe a real life situation accurately.
D. attempt to describe a situation with perfect accuracy.
Answer: C
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When the Fed fears inflation, the Fed ________ government securities, so that the federal funds rate ________ and the quantity of money ________
A) buys; rises; decreases B) sells; falls; increases C) buys; falls; increases D) sells; falls; decreases E) sells; rises; decreases
When an economy experiences a one-time increase in productivity, there is an immediate increase in ________
A) the saving rate B) the capital-labor ratio C) the depreciation rate D) consumption per worker
Which of the following types of countries has experienced decreasing inequality in recent decades?
A. Rich countries B. Countries with low economic growth C. Countries with high economic growth D. None of these has experienced decreasing inequality.
With capitalism, which action might reduce unemployment?
a. increase hiring at private firms b. adjust central planning c. increase government-owned resources d. increase government-controlled investments