The value of a model is determined by
A) the usefulness of its predictions in the real world.
B) the extent of the profit earned by applying it.
C) the realism of its assumptions.
D) the model's attention to real world details.
Answer: A
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Over the past five years, the population growth rate in Kabir’s country has been rising rapidly. How is this most likely impacting the country’s capital stock?
a. Capital stock per worker is increasing. b. Capital stock per worker is fluctuating rapidly. c. Capital stock per worker is declining. d. The population growth rate is not affecting the country’s capital stock.
Giving up consumption today for consumption tomorrow accelerates economic growth by
A) having the economy produce no consumer goods.
B) increasing saving out of disposable income.
C) increasing the expected rate of inflation.
D) rapid expansion of the money supply.
The investment trade-off:
A. defines the opportunity cost of capital investment. B. is why countries don't devote all their resources to capital investment. C. is a reduction in current consumption to pay for the investment in capital intended to increase future production. D. All of these are true.
From a macroeconomic perspective, the problem of low household saving has probably been overstated because:
A. household saving has been increasing steadily over the last three decades. B. it is national saving, not household saving, that allows an economy to accumulate new capital. C. household saving is not related at all to an economy's ability to accumulate new capital. D. household saving represents a smaller share of national saving than does public saving.