An economic theory:
a. should be as detailed as possible in order to model the complexity of an economy
b. is an abstraction from reality.
c. is only useful if it rests on realistic assumptions.
d. is unrealistic and therefore of dubious usefulness in explaining what occurs in a complex economy.
b
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What was the result of the Bretton Woods Conference?
(A) The creation of a fixed exchange-rate system for the United States and much of Western Europe. (B) The creation of NAFTA. (C) The creation of a flexible exchange-rate system for the United States and much of Western Europe. (D) The creation of the euro.
Which of the following will most likely occur during the recovery phase of a business cycle?
A. Real GDP rises, and unemployment falls. B. Real GDP declines, and inflation rises. C. Interest rates rise, and the number of business failures rise. D. Inflation rises, and employment falls.