Which of the following statements about economic models is TRUE?
A. The predictive power of models is not as important as they serve the preferences of economists.
B. Every economic model is based on a set of assumptions.
C. Economic models are designed so that every detail of the real world can be analyzed.
D. Economic models are not empirically testable.
Answer: B
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A pack of cigarettes costs $6. At the age of 16, some people start smoking one pack per day or 365 packs a year. Assume there is no increase in the future price of cigarettes. How much retirement wealth are these people sacrificing if they smoke until reaching the age of 66?
A) $2,190 (=$6 * 365 days). B) $ 109,500 (=$2,190 * 50 years). C) $6. D) $109,500 plus the compound interest income that could have been earned on the funds over the 50 years.
Refer to the above table. What is the GDP price index in Year 1?
105.2 111.5 108.3 109.6
The line that shows the connection between inflation and unemployment in the short run is called the:
A. inflation-employment trade-off. B. Phillips Curve. C. price-work curve. D. aggregate supply.
Refer to the information provided in Table 23.7 below to answer the question(s) that follow. Table 23.7
Refer to Table 23.7. Which of the following statements is false?
A. If aggregate output equals $1000 billion, then aggregate saving equals $100. B. The MPC for this economy is 0.75. C. At an output level of $400 billion, there is a $150 billion unplanned inventory decrease. D. At output levels greater than $800 billion, there is a positive unplanned inventory change.