A model that incorporates time and uncertainty in which prices, wages, and interest rates adjust to bring all markets to equilibrium and which allows economic agents to make decisions in their own interest is known as
A)A dynamic, stochastic, generalequilibrium model
B)A structural macroeconomic model
C)A businesscycle model
D)A statistical model

Question

A model that incorporates time and uncertainty in which prices, wages, and interest rates adjust to bring all markets to equilibrium and which allows economic agents to make decisions in their own interest is known as​
A)​A dynamic, stochastic, general­equilibrium model
B)​A structural macroeconomic model
C)​A business­cycle model
D)A statistical model

Quizplus · Accepted Answer

A dynamic, stochastic, general-equilibrium model incorporates time and uncertainty while allowing for economic agents to make decisions in their own interest. It also takes into account the interdependence of all markets and the adjustments of prices, wages, and interest rates to bring about equilibrium. This type of model is commonly used in macroeconomic analysis and forecasting.

A Model That Incorporates Time and Uncertainty in Which Prices