The Models Used in Economics

question 83

Essay

The models used in economics:
A.are usually limited to variables that are directly related.
B.are essentially not reliable because they are not testable in the real world.
C.are of necessity unrealistic and not related to the real world.
D.emphasize basic relationships by abstracting from complexities in the everyday world.

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Definitions:

Return on Assets

A profitability ratio that measures how efficiently a company is using its assets to generate profit, calculated by dividing net income by total assets.

Shareholder Wealth

The total value of an investment in a company's stock, encompassing capital gains and dividends received over time.

Cash Flows

The comprehensive total of cash and similar to cash assets transferred into and from a business.

Payback Period

The duration needed to recoup the funds spent on an investment.