Economists use models in order to
A. get around having to deal with actual facts.
B. understand real-life events and predict outcomes.
C. avoid having to use theories to understand economic conditions.
D. help elect political candidates.
Answer: B
You might also like to view...
Carefully explain if the following statements are true, false, or uncertain
a. If average cost is increasing, marginal cost must be increasing. b. If there are diminishing returns, the marginal cost curve must be positively sloped. c. Marginal costs decrease as output increases because the firm can spread fixed costs over more units.
Which of the following statements characterize an oligopoly market? a. Oligopoly firms are guaranteed profits due to the lack of competition
b. Firms are aware that their own economic behavior will influence the decisions of rivals. c. There are few barriers to entry. d. Firms choose price and output independently from the decisions made by competitors.
If the potential money multiplier in the U.S. is 4, then a $2,000 increase in demand deposits when banks hold excess reserves will result in which of the following?
a. the money supply will decrease by $8,000 b. the money supply will remain unchanged because the excess reserves will cancel out the potential loans c. the money supply will increase by $8,000 d. the money supply will increase by more than $8,000 e. the money supply, if it increases at all, will increase by less than $8,000
Any amount that a bank chooses to keep on hand beyond what it is required to is called:
A. extra holdings. B. excess reserves. C. federal funds. D. excess deposits.