Economic Models Are Only Useful in Analyzing Government Policy

question 42

Multiple Choice

Economic models are only useful in analyzing government policy.

• A) True, individuals are irrational and therefore economic models are useless.
• B) False, economic models can be used to predict individual and firm behavior.
• C) True, economists only model those questions for which they are hired.
• D) False, economic models are not even useful in analyzing government policy.

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Definitions:

Private Banks

Financial institutions that are owned by private individuals or corporations instead of being owned by the government, offering banking services to individuals and businesses.

Depositors

Individuals or entities that hold accounts with banks or financial institutions, entrusting their funds for safekeeping and earning interest.

Money Market Mutual Fund Account

An investment account that pools money from individuals to invest in short-term, high-quality securities, often offering liquidity and low risk.

Interest-Earning Assets

Financial assets that generate income over time through the payment of interest, such as bonds, savings accounts, and certificates of deposit.