Economic Models Are Only Applicable to Free-Market Countries

question 16

Multiple Choice

Economic models are only applicable to free-market countries.

• A) False. Economic models are applicable wherever there is scarcity.
• B) True. Economic models are applicable only when private citizens are free to make their own decisions.
• C) False. Economic models are applicable in all countries with more than one million people, regardless of political structure.
• D) True. Economic models are only applicable when government is small relative to the rest of the economy.

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Definitions:

Bond Prices

are the market value of bonds, which inversely correlate with interest rates; when rates go up, bond prices typically go down, and vice versa.

Interest Rates

The proportion of a total amount of money that is levied for its utilization, typically stated on a yearly basis.

Money Supply

The absolute total of money-related assets within an economy at a particular time.

Depository Institutions

Financial institutions that accept deposits from the public and offer lending and other financial services.