Which of the following statements is TRUE?
A. No economic model captures every detail that affects a problem.
B. Economic models must fully reflect reality.
C. Economic models always make accurate predictions about behaviors.
D. Economic models use economists' opinions with no use of data.
Answer: A
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When total planned real expenditures change due to the changes in net exports, this is known as the
A) interest rate effect. B) real-balance effect. C) open economy effect. D) aggregate balances effect.
If the government increases spending but does not raise taxes
A) aggregate demand will increase without any effect on the price level. B) borrowing by the government will take place. C) the government will have to sell some assets, such as oil and national parks. D) the government will have to either lower expenditures or raise taxes the next year.
Which of the following was NOT part of Korean industrial policies?
A) An aggressive promotion of exports along with high levels of protection B) Directed credit and tax breaks given to targeted industries C) Bailing out bankrupt firms without any attempt to dispose distressed firms D) Allowing exporting firms to borrow funds at below-market interest rates
In the long run, if some monopolistically competitive firms are earning economic losses then
A. firms will leave the industry. B. raise prices until they earn economic profits. C. new firms will enter the industry. D. they will increase production until marginal costs fall.