Why do economists tend to create models in diagrammatic form?
A. Diagrams distort reality, and theory is an attempt to avoid reality.
B. Because they are unable to construct physical models of their theories.
C. Economic reality can only be represented in diagrams.
D. Most economists like to draw as much as possible.
E. All of these responses are correct.
Answer: B
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During the last part of the 19th century, which of the following factors contributed to the lag in railroad construction in the Southeast and Southwest?
a. sparseness of population b. war-induced poverty c. costal shipping d. All of the above are correct. e. Only b and c are correct.
An increase in the supply of money will lead to a(n)
A) increase in equilibrium real GDP and an increase in equilibrium price level. B) increase in equilibrium real GDP and a decrease in equilibrium price level. C) decrease in equilibrium real GDP and an increase in equilibrium price level. D) decrease in equilibrium real GDP and a decrease in equilibrium price level.
If in a year there is a positive inventory investment, then final sales
A. equal GDP. B. are less than GDP. C. are zero. D. exceed GDP.
Refer to the information provided in Figure 12.3 below to answer the question(s) that follow. 
Figure 12.3
Refer to Figure 12.3. The DVD industry is a constant-cost industry. As the demand for DVD players shifts from D' to D, which of the following will not occur?
A. If the market for DVD players is perfectly competitive, economic profits in this industry will decrease in the short run, but will fall back to zero in the long run. B. Fewer resources will be allocated to produce DVD players. C. If the market for DVD players is competitive the price will decrease to $4.00 in the short and long run. D. The demand for DVDs will decrease.