Is the Equation of Exchange an Economic Model

question 19

Multiple Choice

Is the equation of exchange an economic model?

• A)Yes, it is a simple but powerful model.
• B)No, economic models cannot be equations.
• C)No, it is merely an arithmetic statement.
• D)Yes, it is a cause-and-effect model.

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Definitions:

Algorithms

Step-by-step procedures or formulas for solving problems, often employed in the fields of mathematics and computer science.

Availability Heuristic

A cognitive shortcut that depends on the first examples that spring to mind when one assesses a particular topic, concept, strategy, or choice.

Framing Effect

The influence of context or the way information is presented on how it is perceived and interpreted.

Representativeness Heuristic

A mental shortcut used for making decisions or judgments, where the likelihood of an event is estimated based on how much it resembles the typical case.