Economists Make Abstract Assumptions About Reality in Theories and Models

question 68

Multiple Choice

Economists make abstract assumptions about reality in theories and models in order to _____.

• A) provide a precise and accurate explanation of behavior
• B) simplify the real world and predict behavior
• C) assert and represent particular beliefs
• D) incorporate all the details of real-world economic problems

Grasp the objectives and significant components of internal control systems.

Acknowledge the impact and requirements of the Sarbanes-Oxley Act on internal controls and financial reporting.

Recognize the importance of separate ledger accounts for different forms of cash.

Understand the enhancement of internal control through the separation of functional responsibilities.

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Definitions:

Unique Approach

A distinctive method or way of dealing with problems, carrying out tasks, or achieving objectives that sets it apart from others.

Anchoring and Adjustment Bias

A cognitive bias where an initial piece of information (anchor) significantly influences subsequent judgments or decisions.

Confirmation Error

A cognitive bias involving the tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Representativeness Bias

A cognitive bias where individuals make judgments about the probability of an event based on how much it resembles their existing stereotypes.