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.
b
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Which of the following would most likely cause a rightward shift in an economy's aggregate supply curve?
A) An increase in interest rates B) A tax increase of 50 cents per gallon for gasoline C) An across-the-board reduction of wages in the manufacturing sector D) The passage of legislation mandating a reduction in automobile pollution E) The shutdown of plants and movement of production of goods abroad
When products that create positive externalities are produced, at the market equilibrium output, the social benefit generated by consuming the product exceeds the private benefit
Indicate whether the statement is true or false