Economists build economic models by
a. generating data.
b. conducting controlled experiments in a lab.
c. making assumptions.
d. reviewing statistical forecasts.
Answer: c. making assumptions.
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Refer to Figure 16-12. An increase in government purchases of $200 billion causes aggregate demand to shift ultimately from AD1 to AD2
Assuming a constant price level, the difference in real GDP between point A and point B will be ________ $200 billion. A) less than B) greater than C) equal to D) There is insufficient information given here to draw a conclusion.
A microeconomist — as opposed to a macroeconomist — might study
a. the effect of a national healthcare program on the nation's unemployment rate. b. the effect of new regulations on production in the pulp and paper industry. c. the effect of changes in interest rates on gross domestic product. d. the growth rate of production in the economy.
The conventional monetary policy to fight inflation would be to
A. increase the rate of monetary growth. B. decrease the rate of monetary growth. C. run budget deficits. D. run budget surpluses.
Assume that you pay $10,000 of tax on a taxable income of $50,000. If your taxable income were $150,000, your tax payment would be $25,000. This suggests the tax is:
A. progressive. B. proportional. C. regressive. D. discriminatory.