All economic models must involve simplifications because
a. economists would be unable to command high salaries if their models were so simple that anyone could understand them
b. human behavior is very erratic and unpredictable
c. reality is too complex to understand in its entirety, so we must reduce it to a level that we can understand
d. they always try to duplicate all possible information and cover all possible variables that might influence decision making
e. we must rely on value judgments and ignore reality
C
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In the long-run, an increase in the budget deficit and an expansionary monetary policy would:
A) increase the price level only. B) increase both the price level and real income. C) increase real income only. D) none of the above.
If a country had a real GDP of $500 million, and the GDP Ddeflator was 90, what is the nominal GDP?
a. $440 million b. $540 million c. $450 million d. $550 billion
If a country allows free trade and its domestic price for a given good is lower than the world price, then it will import that good
a. True b. False Indicate whether the statement is true or false
A sandwich shop lowers the price of tuna sandwiches. The shop suddenly sells more tuna sandwiches than usual. Which of the following does this change in sales show?
A. Substitution effect B. Income effect C. Law of demand D. Law of supply