What is an economic model?
What will be an ideal response?
An economic model is a simplified version of reality used to analyze real-world economic situations.
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Which of the following pairs are not considered to be complementary goods?
A. fertilizer and irrigation systems B. cereal and milk C. digital cameras and memory cards D. coffee and tea
If the ratio of net worth to vault cash is .2, the prime rate is .05, and the required reserve ratio is .25, the demand deposit expansion multiplier is
A) 2. B) 4. C) 5. D) .25.
Which of the following statements most accurately describes the role of banks in the United States between the Civil War and WWI?
a. The U.S., which had the largest economy in the world, also had the largest banks in the world. b. Banking reforms increased the ability of state banks to issue their own notes. c. Compared to state banks, national banks generally had higher reserve requirements and more restrictions on how they could handle their assets. d. Those who borrowed money at fixed interest rates gain significantly during deflationary periods.
A surplus or shortage in the money market is eliminated by adjustments in the price level according to
a. both liquidity preference theory and classical theory. b. neither liquidity preference theory nor classical theory. c. liquidity preference theory, but not classical theory. d. classical theory, but not liquidity preference theory.