In Constructing Models,economists

question 137

Multiple Choice

In constructing models,economists

• A)leave out equations,since equations and models tend to contradict one another.
• B)ignore the long run,since models are useful only for short-run analysis.
• C)sometimes make assumptions that are contrary to features of the real world.
• D)try to include every feature of the economy.

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Definitions:

Gross Income

The total income from all sources before any deductions or taxes are applied.

Net Income

The total earnings of a person or company after all expenses and taxes have been subtracted from total revenue.

IRS Method

A specific approach or set of guidelines established by the Internal Revenue Service for calculating taxes, deductions, and credits.

Mortgage Interest

The amount charged for borrowing money to purchase property, which can often be deducted from income taxes under certain conditions.