Economic models
a. are always based on realistic assumptions.
b. usually predict perfectly.
c. can never be tested with real world data.
d. are used to describe cause-and-effect relationships.
e. are too simple to be of much use.
d
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When studying pollution and the environment, economists
A) have no role to play. B) concentrate on the physical aspects of the environment. C) emphasize costs and benefits. D) attempt to reduce pollution at all costs. E) think pollution is good if it occurs when production takes place.
Contractionary fiscal policy should be used if:
A) aggregate demand-aggregate supply equilibrium is below potential output. B) aggregate demand-aggregate supply equilibrium is above potential output. C) aggregate demand-aggregate supply equilibrium is equal to potential output. D) none of the above.