The usefulness of a model is determined by
A) whether it helps to explain or predict real world phenomena.
B) whether it possesses realistic assumptions.
C) how well it uses the ceteris paribus assumption.
D) how many of the possible relationships that exist are included in the model.
A
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Suppose the desired reserve ratio is 10 percent and there is no currency drain. Then a $200 increase in the monetary base results in the banking system increasing the quantity of money by
A) $200. B) $2,000. C) $20. D) $10. E) $2,190.
A given industry, Z, is such that the 1-firm, 2-firm, 4-firm and 8-firm concentration ratios are the same. Based on this, we can conclude that Industry Z is
A) pure competition. B) monopolistic competition. C) oligopoly. D) pure monopoly.
Which of the following is the strongest criticism of the model of the rational consumer maximizing marginal utility per price within the constraints of a budget?
a. It is difficult for consumers to know the exact utility of the products they are buying. b. It is difficult for consumers to know the exact price of the products they are buying. c. It is difficult for consumers to accurately calculate the budget they have available to spend. d. It is difficult for consumers to accurately calculate the demand for the products they are buying.
According to the aggregate supply curve, what happens as the price level increases?
(A) Consumers increase their spending. (B) Profits decrease. (C) Real GDP falls. (D) Firms have more of an incentive to increase output.