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Chapter 2 Thinking Like an Economist




Question;40. In building economic models, economists often omit;a.;assumptions.;b.;theories.;c.;details.;d.;equations.;41. Which of the following statements about economic models is correct?;a.;Economic;models are built to mirror reality exactly.;b.;Economic;models are useful, but they should not be used for the purpose of improving;public policies.;c.;Because;economic models omit many details, they allow us to see what is truly;important.;d.;Economic;models seldom incorporate equations or diagrams.;42. Economic models;a.;cannot;be useful if they are based on false assumptions.;b.;were;once thought to be useful, but that is no longer true.;c.;must;incorporate all aspects of the economy if they are to be useful.;d.;can be;useful, even if they are not particularly realistic.;43. 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 economists? understanding of the real world.;c.;They;omit many features of the real-world economy.;d.;In;constructing models, economists make assumptions.;44. Economic models;a.;are;constructed to mirror reality as closely as possible, and in this respect;economic models are no different from other scientific models.;b.;are;constructed to mirror reality as closely as possible, and in this respect;economic models are very different from other scientific models.;c.;are;simplifications of reality, and in this respect economic models are no;different from other scientific models.;d.;are;simplifications of reality, and in this respect economic models are very;different from other scientific models.;45. Economic models;a.;are not;useful because they omit many real-world details.;b.;are;usually composed of diagrams and equations.;c.;are;useful because they do not omit any real-world details.;d.;are;usually plastic representations of the economy.;46. Just like models constructed in other areas of science, economic;models;a.;incorporate;assumptions that contradict reality.;b.;incorporate;all details of the real world.;c.;complicate;reality.;d.;avoid;the use of diagrams and equations.;47. Which types of models are built with assumptions?;a.;economic;models, but not models in other disciplines such as physics and biology;b.;economic;models as well as models in other disciplines such as physics and biology;c.;models;that are built for teaching purposes but not for research purposes;d.;bad;models;48. An assumption an economist might make while studying international;trade is;a.;there;are only two countries.;b.;countries;only produce two goods.;c.;technology;does not change.;d.;All of;the above are possible assumptions.;49. Economists build economic models by;a.;generating;data.;b.;conducting;controlled experiments in a lab.;c.;making;assumptions.;d.;reviewing;statistical forecasts.;50. Economic models are built with;a.;recommendations;concerning public policies.;b.;facts;about the legal system.;c.;assumptions.;d.;statistical;forecasts.


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