An economic model can be defined as
A. a testable claim that can be evaluated with proper data.
B. a representation of a theory or a part of a theory.
C. another word for theory.
D. a method to distinguish correlation from causation.
E. All of these responses are correct.
Answer: B
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Suppose that a bond promises to pay its holder $100 a year forever. If the price of the bond increases from $1,000 to $1,250, then the interest rate on the bond
A) falls from 10 percent to 8 percent. B) rises from 8 percent to 10 percent. C) does not change because it is not affected by the price of the bond. D) falls from 10 percent to 6 percent.
The demand for Mexican tomatoes by an American food grocery chain creates a
A) demand for the U.S. dollar. B) demand for an interest rate differential. C) supply of Mexican pesos. D) supply of U.S. dollars.
In response to a surplus the market price of a good will fall; as the price falls, the quantity demanded will increase and quantity supplied will decrease until equilibrium is reached
Indicate whether the statement is true or false
Transaction costs are the cost of negotiating and executing an exchange
a. True b. False Indicate whether the statement is true or false