Choose the Answer That Best Explains Why Economists Build Models

question 31

Multiple Choice

Choose the answer that best explains why economists build models that abstract from the complexities of reality.

• A)Because the complexities of reality are unimportant.
• B)Because economists are not interested in reality.
• C)Because this allows economists to conduct controlled experiments to test their theories.
• D)Because they believe they gain a greater understanding of reality.
• E)Because economics deals only in the abstract.

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Definitions:

End-Of-Quarter Payments

Payments that are made at the end of each quarter, typically in a financial or leasing agreement.

Monthly Payments

Regular payments made once a month, commonly in the context of loans, rent, or other agreements.

Present Value

The present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.

Annuity

A financial instrument providing a steady series of payments to a person, mainly utilized as a source of income for people in retirement.