A good economic theory: rests on realistic assumptions. explains economic behavi

ID: 1173942 • Letter: A

Question

A good economic theory:

rests on realistic assumptions.

explains economic behavior and predicts well.

can best be expressed mathematically.

always provides a highly detailed analysis of an economic sector.

A change in taxes of a given amount affects aggregate expenditure by ____ than that amount, because the marginal propensity to consume is ____.

less; less than 1

greater; greater than 1

greater; always equal to 1.

less; equal to zero.

A decrease in taxes will do which of the following in the long run?

decrease unemployment

increase real output

decrease the price level

None of the above.

rests on realistic assumptions.

explains economic behavior and predicts well.

can best be expressed mathematically.

always provides a highly detailed analysis of an economic sector.

1. Option b.

2. Option a.

3. Option a.

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