Why must a good economic theory use abstraction?
a. It makes theories more complicated and thus more accurate.
b. It summarizes, thereby making theories easy for lay people to understand.
c. The world is too complex to analyze without it.
d. Economics is too unpredictable to analyze without it.
c. The world is too complex to analyze without it.
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A friend is currently earning income but does not expect to earn income in the future. When the interest rate rose, I observed him saving less. From this, I can conclude that current consumption is an inferior good for my friend.
Answer the following statement true (T) or false (F)
The supply curve for a product reflects the
a. willingness to pay of the marginal buyer. b. quantity buyers will ultimately purchase of the product. c. cost to sellers of producing the product. d. seller's profit from producing the product.
Crowding out occurs when
a. investment declines because a budget deficit makes interest rates rise. b. investment declines because a budget deficit makes interest rates fall. c. investment increases because a budget surplus makes interest rates rise. d. investment increases because a budget surplus makes interest rates fall.
The poverty rate in the United States is highest for:
A. married couples. B. childless households. C. female headed households. D. single people.