Which of the following are we likely going to want to explain with an economic model?
i. Why people in the United States are 50 times richer than Ethiopians.
ii. What causes economic growth.
iii. What we think politicians should do with taxes.
A) i only
B) ii only
C) iii only
D) i and ii
E) All of these options are correct.

Question

Quizplus · Accepted Answer

i. The vast difference in per capita income between the United States and Ethiopia is a classic economic problem that would require an economic model to explain. Factors such as labor productivity, natural resource availability, investment levels, and government policies could all be potential variables in such a model.

ii. Understanding the drivers of economic growth is a fundamental area of study in economics. Researchers use models to explore the relationships between variables such as technology, labor, capital, and institutions in order to determine what factors contribute to long-term economic growth.

iii. While political opinions surrounding tax policies can differ, the question of what politicians should do with taxes is more of a normative rather than positive question. Normative questions involve subjective judgments about what should be done, whereas economics deals primarily with positive questions, which are concerned with explaining what actually happens in the world. Therefore, economic models may not be the best tool for addressing this question.

Which of the Following Are We Likely Going to Want