An economic theory:
a. should be as detailed as possible in order to model the complexity of an economy
b. is an abstraction from reality.
c. is only useful if it rests on realistic assumptions.
d. is unrealistic and therefore of dubious usefulness in explaining what occurs in a complex economy.
b
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In the early 1920s,
a. Germany experienced a very high rate of inflation. b. the quantity of German money was declining rapidly. c. the value of German money remained almost constant. d. All of the above are correct.
A firm estimates its long-run production function to beQ = -0.0075K3L3 + 12K2L2Suppose the firm employs 12 units of capital. The product curve(s) in the short-run are
A. MP = -38.88 L2 + 3,456L. B. AP = -12.96 L3 + 1,728L2. C. TP = -12.96 L3 + 1,728L2. D. both a and b E. both a and c
Consumption expenditures include spending by households on:
A. residential housing. B. exports. C. services. D. inventories.
The decline in the value of the dollar from 1985 to 1988 was beneficial to
A. American tourists travelling to Europe. B. firms importing goods into America. C. American exporting businesses. D. foreigners holding U.S. government bonds.