Which of the following statements is FALSE?
A) Economists empirically test their models.
B) Economic models are not used to make predictions.
C) An economic model should capture only the key relationships that are sufficient to analyze the particular problem being studied.
D) Economic models relate to behavior rather than to individual thought processes.
Answer: B
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According to Adam Smith's invisible hand
A) markets need the government to intervene. B) forces are constantly pushing markets out of equilibrium C) people coordinate their activities, resulting in equilibrium in the market. D) there is an invisible glove that restricts what markets can do.
A perfectly inelastic supply curve is also called an infinitely elastic supply curve
a. True b. False Indicate whether the statement is true or false
If the equilibrium price of lettuce is $.80 per head and the government imposes a price floor of $.70 per head, the price of lettuce will
A. decrease to $.70. B. remain at $.80. C. decrease to $.75. D. be impossible to determine.
If the long-run Phillips curve shifts to the left, then for any given rate of money growth and inflation the economy has
a. higher unemployment and lower output. b. higher unemployment and higher output. c. lower unemployment and lower output. d. lower unemployment and higher output.