The use of data in economic models is important because
A) the model's predictive value rests on supportive evidence from real-world data.
B) the models are always complex in nature.
C) models must analyze every possible angle of the problem.
D) social problems analyzed by economists require long streams of data.
Answer: A
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
When the demand curve is downward sloping, marginal revenue is
A) equal to price. B) equal to average revenue. C) less than price. D) more than price.
In the figure below, spending $1 million on advertising increases the demand from D0 to D1. The gross average cost curve, LACGROSS, excludes the cost of the advertising. Before the firm advertised, the profit-maximizing price and quantity were ________ and after the firm advertised the profit-maximizing price and quantity are ________
A) $30 per unit and 1 million units; $50 per unit and 3 million units
B) $20 per unit and 2 million units; $60 per unit and 2 million units
C) $20 per unit and 1 million units; $20 per unit and 3 million units
D) $30 per unit and 1 million units; It is impossible to tell because the cost of the advertising is not included in the gross average cost.
If official U.S. poverty statistics included in-kind transfer payments the:
a. poverty rate would be close to zero. b. poverty rate would be lower. c. government deficit would be lower. d. top 10 percent of those in the income distribution would be wealthier.