An assumption that affects a model in important ways is
a. a key step
b. a simplifying assumption
c. a bad assumption, one that should be avoided in economic theory
d. a critical assumption
e. one that should be replaced with empirical evidence
D
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If we compare income percentages of total income of the highest quintile in 1968 with 2008, we would find that it was
A. rising. B. staying about the same. C. falling.
An explanation for the low saving rate in the United States consistent with the life-cycle reason for saving includes:
A. large and persistent capital gains. B. households spending beyond their means to keep up with community standards. C. relatively generous government assistance for the elderly and large down payments required for home purchases. D. highly-developed financial systems making it easy to buy homes with down payments under 15 percent.
The idea that small changes can render behavior or another complex system completely unpredictable is referred to as the:
A. path-dependent model. B. heuristic model. C. regression model. D. butterfly effect model.
A competitive firm
A. Is a price taker. B. Is large enough relative to the market to be taken into account by competitors. C. Confronts a downward-sloping firm demand curve. D. Has the market power to compete effectively.