The value of a model is determined by
A) the usefulness of its predictions in the real world.
B) the extent of the profit earned by applying it.
C) the realism of its assumptions.
D) the model's attention to real world details.
A
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Which of the following is a possible outcome of setting a legal maximum rental rate below the market clearing rental rate?
A) an increase in the quantity of rental housing supplied B) a decrease in the quantity of rental housing demanded C) a black market in rental housing D) a surplus of rental housing
Nicole's income elasticity of demand for hats is 1.5 . All else equal, this means that if her income increases by 20 percent, she will buy
a. 150 percent more hats. b. 50 percent more hats. c. 30 percent more hats. d. 20 percent more hats.
Monetarists believe that the aggregate supply curve is relatively steep in the short and long runs. This means they expect
A. inflation with no change in output. B. increases in output to bring much inflation. C. increases in output to bring little inflation. D. decreases in output to bring much inflation.
The existence of the Federal Deposit Insurance Corporation (FDIC):
A. increases the risk of moral hazard in the savings and loan industry. B. reduces the risk of moral hazard in the savings and loan industry. C. increases the risk that customers of savings and loans will engage in moral hazard, but reduces the risk that the lenders will engage in moral hazard. D. reduces the risk that customers of savings and loans will engage in moral hazard, but increases the risk that the lenders will engage in moral hazard.