A model:
A) is often based on simplifying assumptions that are not necessarily true.
B) can be tested without data or statistics.
C) is a more complex representation of reality than a theory.
D) can never be used to predict the future but helps explain the past.
A
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An economist for a bicycle company predicts that, all else held constant, an increase in consumer incomes will increase the demand for bicycles. This prediction assumes that
A. there are many goods that are substitutes for bicycles. B. there are many goods that are complementary to bicycles. C. bicycles are a normal good. D. there are few goods that are substitutes for bicycles.
Deflation began in the year _____.
________ are costs that do not require a monetary payment.
A. Implicit costs B. Explicit costs C. Accounting costs D. All opportunity costs
Suppose there is a 5 percent increase in nominal demand in every industry in an economy. Factors that keep the price level from also rising by 5 percent are called
A) real rigidities. B) nominal rigidities. C) macroeconomic externalities. D) indexations.