All Economic Models Must Involve Simplifications Because

question 50

Multiple Choice

All economic models must involve simplifications because:

• A)economists would be unable to command high salaries if their models were so simple that anyone could understand them.
• B)human behavior is very erratic and unpredictable.
• C)reality is too complex to understand in its entirety,so we must reduce the complexity to a level that we can understand.
• D)they always try to duplicate all possible information and cover all possible variables that might influence decision making.
• E)we must rely on value judgments and ignore reality.

---

Definitions:

Devaluation

Reduction in a currency’s value relative to other currencies or to a fixed standard.

Imports

The act of bringing goods or services into one country from another for commercial purposes.

Domestic Buyers

Consumers or entities within a country that purchase goods and services produced in their own country.

Tariffs

Taxes imposed by a government on imported or exported goods.