Economists develop models to
A. make their arguments more realistic.
B. help us understand economic phenomena in the real world.
C. justify the assumptions they make about people's behavior.
D. capture every detail of the real world.
Answer: B
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Organic food might be good for your health but in light of the 2008 downturn in the economy and falling incomes, consumers are buying less organic and more non-organic food. Based on these events, what is TRUE?
A) Organic food is a normal good and non-organic food is an inferior good. B) Organic food is an inferior good and non-organic food is a normal good. C) Organic food is a normal good and non-organic food is a normal good. D) Organic food is an inferior good and non-organic food is an inferior good.
A price system is considered to be efficient when
A) it fails to have the goods that consumers want. B) an underground market develops. C) all resources are allocated to the highest-valued uses. D) firms produce more than what consumers want.
Jane is currently developing a model to explain the national unemployment rate. This is an example of
A) a microeconomic topic. B) normative analysis. C) positive analysis. D) how people act in an irrational manner.
Which of the following is not considered investment in the national income accounts? a. The purchase of a drill press by XYZ company
b. Construction of a new housing project. c. The accumulation of inventories on a grocer's shelves. d. The purchase of 1000 shares of IBM stock.