All of the Following Except One Are True of Economic

question 125

Multiple Choice

All of the following except one are true of economic theories or models. Which one is the exception?

• A) They attempt to establish cause and effect between economic variables.
• B) They always reflect reality.
• C) They are built with assumptions and then tested with facts.
• D) They are generalizations used to give context to our observations.

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Definitions:

Annual Rates

The yearly return or interest rates associated with financial products or investments.

Strip Bond

A debt instrument that has had its interest and principal payments separated (stripped) into two distinct parts, both of which are sold separately.

Market Rate

The prevailing interest rate available in the marketplace for investments or loans, which fluctuates based on demand, supply, and economic conditions.

Issue Price

The price at which a new set of securities is offered to the public for the first time.