By using the ceteris paribus assumption in conjunction with a model, economists can
A. hold certain factors constant.
B. suspend the rationality assumption.
C. avoid having their model depend on any additional assumptions.
D. be sure that the model will predict correctly.
Answer: A
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Which of the following is not a consequence of hyperinflation?
A) The price level grows in excess of hundreds of percentage points per year. B) Hyperinflation causes an economy to suffer slow growth. C) Money loses value so rapidly that individuals and firms stop holding it. D) Money's function as a medium of exchange is enhanced.
Keynesian economists would likely argue that the classical model is which of the following?
A) a long-run theory B) a short-run theory C) both a long-run and short-run theory D) a sticky price theory
Which of the following are considered sources of bias in the CPI?
a. Prices changing too rapidly; substitution, new technologies; and quality changes. b. Prices changing too rapidly; substitution; quality changes; and growth in discounting. c. Quality changes; new technologies; prices changing too rapidly; and growth in discounting. d. Substitution; new technologies; prices changing too rapidly; and growth in discounting. e. Quality changes; new technologies; substitution; and growth in discounting.
When a price ceiling which had been set below equilibrium price is removed, what happens next?
A. quantity supplied rises. B. quantity demanded falls. C. price rises. D. all of the choices.