A Model Is Used to Explain Economic Behavior

question 50

Multiple Choice

A model is used to explain economic behavior. Therefore

• A)the assumptions must be complex while the model itself is simple.
• B)the model must be complex.
• C)the model must be simple.
• D)the model can be either simple or complex so long as it explains economic behavior.

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Definitions:

Aggregate Production

The total output of goods and services produced by an economy over a specific time period.

Net National Product

The total market value of all final goods and services produced by the residents of a country in a given time period, minus depreciation.

Real GDP

Gross Domestic Product adjusted for inflation, measuring the value of goods and services produced by a country in real terms.

Base Year

A specific year against which economic growth is measured, serving as a standard comparison for financial indices and economic data.