An Economic Theory

question 144

Multiple Choice

An economic theory:

• A)​should be as detailed as possible in order to model the complexity of an economy.
• B)​is an abstraction from reality.
• C)​is only useful if it rests on realistic assumptions.
• D)​is unrealistic and therefore of dubious usefulness in explaining what occurs in a complex economy.

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Definitions:

Automobile Purchases

The action or activity of buying vehicles intended for personal or commercial use on roads.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the percentage of additional income that is paid in taxes.

Equilibrium Quantity

The quantity of goods or services supplied and demanded at the equilibrium price, where market supply and demand balance.

Excise Tax

A tax on the production, sale, or consumption of a commodity in a country.