An Economic Model Is

question 139

Multiple Choice

An economic model is

• A)tested by examining the realism of its assumptions.
• B)useful if it predicts well,even if its assumptions are not realistic.
• C)tested by the Testing Committee of the Canadian Economic Association.
• D)not useful unless it predicts with 100 percent accuracy.
• E)not useful because it simplifies real problems.

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Definitions:

Standard Deviation

A statistic that measures the dispersion of a dataset relative to its mean and is calculated as the square root of the variance.

Inflation

A general increase in prices and fall in the purchasing value of money over time.

Taxes

Mandatory financial charges or levies imposed by governments on individuals or entities to fund government spending and various public expenditures.

Capital Allocation Line

A graph line that represents all possible combinations of risk-free and risky assets for an investor.