The Models That Economists Construct

question 58

Multiple Choice

The models that economists construct:

• A)usually make simplifying assumptions.
• B)often rely on physical constructs,such as those used by architects.
• C)rarely use mathematical equations or graphs.
• D)attempt to precisely replicate the real world.

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Definitions:

Double Digit Yields

Interest or dividend rates that are in the double digits percentage-wise, indicating high returns on investment but typically with higher risk.

Single Digit Returns

Single digit returns refer to the percentage gain or loss on an investment that is less than ten percent, indicating a low to moderate performance.

Liquidity

The ability of an asset to be quickly converted into cash without significantly affecting its price.

Default Risk

The possibility that a borrower will fail to meet the obligations of a loan agreement.