Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 1, Problem 4QQ
To determine
Identify which option is correct for an economic model.
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True/false/explain.
Economic models must mirror reality or they are of no value.
When economists make normative statements, they are more likely to be acting as scientists.
Models are used to describe cause-and-effect relationships
a. True
b. False
All economic models are wrong. Yet, we study models in order to answer economic questions. Explain.
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- Econometric models have nothing to do with the reality." What say you?arrow_forwardWhich statement is not true about the use of models in economics? 1. They are based on simplifying assumptions. 2. They are used to forecast economic variaables such as GDP growth. 3. They must closely mirror real life in order to be informative. 4. There are often multiple models that seek to explain the same economic phenomena. 5. They are usually represented graphicallyarrow_forwardEconomic models A are complicated because human behavior is complicated. B are simplifications of the phenomena they attempt to explain. C are exactly the same as the phenomena they describe. D require either algebra or graphs.arrow_forward
- Which of the following is not correct about most economic models? A) They are composed of equations and diagrams. B) They contribute very little to economist's understanding. C) They omit many features of the real world economy. D) In constructing models, economists make assumptions.arrow_forwardEconomic Models? a. are essential representations of the real world b. are used to explain how people think c. are never used for making economic projections or predictions d. are used to explain how people behavearrow_forwardMODIFIED TRUE or FALSE. Write “T” if the given statement is TRUE, correct and valid. Write “F”, if otherwise. If your answer is either “T” or “F” explain, why is it true or false. Cite a theory, use a formula or graph to support your answers. 1. Microeconomics is a branch of economics that deals with the decisions of individual households and firms. 2. Economic model is an abstract representation of the “unreal world” phenomena that one wishes to examine. 3. Economic model can be expressed to an equation holding other variables to be constant. 4. Independent variable or the explanatory variable (in an economic model) is the variable that provides the explanation for any change(s) in the response variable. 5. Points below the Production Possibility Frontier or PPF are the choices of the society that are infeasible due to its limited resources.arrow_forward
- Identify each statement as being associated with neoclassical economics or behavioral economics a. People are eager and accurate calculators. b. People are often selfless and generous. c. People have no trouble resisting temptation. d. People place insufficient weight on future events and outcomes. e. People treat others well only if doing so will get them something they want.arrow_forwarda. Explain why scarcity leads to tradeoffs. b. What is the difference between positive and normative analysis? Which of the following statements would entail positive analysis, and which normative analysis? i. Internet auction companies will erode the profits of local automobile dealerships. ii. The government should impose special taxes on sales of merchandise made over the Internet. c. Why is the circular flow model important?arrow_forwardWhat is an economic model?arrow_forward
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