To Be Useful, Macroeconomic Models

question 6

Multiple Choice

To be useful, macroeconomic models

• A) must be complete, accurate descriptions of the world.
• B) never generates testable hypothesis.
• C) must be simple.
• D) provides a lot of intricate details.
• E) must be extremely realistic.

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Definitions:

Monopsony Wage Rate

The wage rate determined in a market where there is only one buyer of labor, giving this buyer significant power over the wage rate.

Economic Rents

Extra earnings above the minimum level required to keep a resource in its current use, often associated with scarce resources or monopolistic markets.

Non-Union Workers

Employees who are not members of a labor union and typically do not receive the collective bargaining benefits that unionized workers do.

Wage Discrimination

The practice of paying different wages to employees for the same type of work based on race, gender, age, or other irrelevant factors.