When indifference curves have ________ marginal rates of substitution, any interior choice that satisfies the tangency condition is the best affordable choice.

In the long run, the real interest rate is 3 percent, real GDP grows at 4 percent, velocity is constant, and the quantity of money grows at 8 percent. The nominal interest rate is

A) 7 percent. B) 12 percent. C) 10 percent. D) 8 percent. E) 6 percent.

The objective of an economic model is to

a. be an accurate description of reality b. yield better understanding of important relationships c. use simplifying assumptions to make positive economic statements d. use basic principles of economics to derive fundamental assumptions about human behavior e. predict real-world occurrences with complete accuracy