Question

Economic models like the __________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories.
a) Specialization Model
b) financial capital market
c) financial investment market
d) circular flow diagram

Answer 1

Answer:

Economic models like the circular flow diagram  are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories.

d) circular flow diagram

Explanation:

Economic models are a form of theoretical construct that consists of economic variables and quantities and the relationships between them. The relationship between the construct forms a basis for hypothesis for economic behavior. Economic models can be used to observe, understand and predict economic behavior. There are different economic models such as;

1. Specialization Model

This is a type of economic model where more attention is given to the production of specific goods and services for better efficiency in terms of time, cost and quality.

2. Financial capital market

This is a type of financial market that provides a platform for the buying and selling of capital in the form of long-term debt and securities. They basically act like a bridge between those who have capital and those who need the capital.

3. Financial investment market

This is also another type of financial market that provides a platform where financial assets and it's equivalent can be traded for the sake of investment. They include; stocks, bonds and assets.

4. Circular flow diagram

This is a type of visual representation that illustrates how money and commodities of trade move in an economy. It is a type of economic model that uses diagrams to represent economic patterns and theories.