A theory can best be defined as
A. an untested assertion of untested fact.
B. a set of assumptions that simplify the real world.
C. the opinion of a reliable person who studies a subject or discipline.
D. a deliberate simplification of factual relationships that attempts to explain how those relationships work.
E. the accumulation of knowledge that has been verified by the scientific community.
Answer: D
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In the Keynesian model in the long run, an increase in the money supply will raise
A) the price level but not the level of output. B) the level of output but not the price level. C) both the level of output and the price level. D) neither the level of output nor the price level.
National defense is considered a public good because there appears to be no limits to the nonrivalry-in-consumption characteristic, and exclusion of nonpayers is impossible. Are there any other goods that so perfectly meet both public goods criteria?
A monopolist will not earn any economic profits when
A) AVC is a minimum. B) AFC is very high. C) ATC lies above the demand curve. D) ATC lies below the demand curve.
Answer the following questions true (T) or false (F)
1. The Fed can simultaneously reduce the inflation rate and stimulate growth through lowering interest rates. 2. A monetary policy target is a variable that the Fed can affect directly, which then affects one or more of the Fed's policy goals. 3. Ceteris paribus, an increase in the money supply will lower short-term interest rates.