Every economic model should include money as a variable. This statement is
A) true, because every transaction in the economy uses money.
B) true, because the federal reserve is very important.
C) false, because some transactions in the economy are transacted without money.
D) false, because a model can get unnecessarily complex if it includes money.
D
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In a competitive market, if buyers did not know all the prices charged by the many firms
A) all firms still face horizontal demand curves. B) firms sell a differentiated product. C) demand curves can be downward sloping for some or all firms. D) the number of firms will most likely decrease.
Some economists believe that deficit spending can impose a burden on future generations. Which of the following does NOT explain the burden?
A) Investment will be crowded out by an increase in current consumption. B) Deficit spending that is allocated to purchases leads to long-term increases in real GDP. C) Future generations will have a smaller capital stock that will reduce their wealth. D) Future generations will have to be taxed at a higher rate.