In order to understand when a model may not be accurate, which is not an important action to take?

• Identify what important details were omitted when developing a model.

• Make sure the model all includes all possible details.

• Test the model for accuracy.

• Make sure assumptions made in the model are clear and accurate.

Scarcity requires that we:

• change our fiscal policy until the situation of scarcity is eliminated.

• make decisions in order to arrange our resources rationally.

• adopt economic policies that will lead to unlimited resources.

• make sure we only want things that we are capable of consuming and producing.

Households are vital to the circular flow model in what two ways?

• They export goods and services and import goods and services.

• They supply factors of production and purchase goods and services.

• They vote for political officers and pay taxes.

• They facilitate exchange between consumers and firms

Which of the following is an example of a disincentive?

• A local gym offers a weight loss competition and the winner earns a free trip to Bermuda.

• Law enforcement creates a "Mug Shots" section online in order to discourage potential law breakers.

• You offer workers a bonus if they sell 100 widgets per month.

• Your professor offers to edit your paper before it's graded if you turn it in early.