Which of the Following Statements Concerning Economic Models Is FALSE

question 46

Multiple Choice

Which of the following statements concerning economic models is FALSE?

• A) Economic models must provide usable predictions.
• B) Economic models are based on data alone and no assumptions.
• C) Economic models are tested empirically.
• D) Economic models relate to how people behave.

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Definitions:

Investment Decision

The process of making choices about where to allocate limited resources or capital to generate the highest potential return.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing and the real yield to savers, providing a clearer picture of the value of money over time.

Real Interest Rate

The nominal interest rate adjusted for inflation, reflecting the true cost of borrowing and the true yield on savings.

Nominal Interest Rate

The stated interest rate of a loan or investment without adjusting for inflation, representing the surface level cost of borrowing or the raw return on an investment.