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Economists and others use economic theory

Economists and others use economic theory

a.only to analyze situations in which money changes hands.

b.as a partial basis for public policy recommendations.

c.to confuse their enemies.

d.to replace value judgments about important policy issues.

162. Economic theory

a.is a deliberate simplification of factual relationships.

b.seeks to disprove a hypothesis.

c.is based mainly on assumptions.

d.seeks to prove political ideals.

163. A theory is an abstraction used often by economists to

a.describe a problem.

b.keep all assumptions in their proper places.

c.explain why things work the way they do.

d.describe a hierarchical ordering of facts.

e.arrange variables into a graphical format.

164. Economic theory is a necessity, not a luxury. This statement is true because theory

a.always leads to practical and useful policy.

b.can prevent depressions in the economy.

c.substitutes for vast amounts of data.

d.provides a structure for organizing and analyzing data.

e.always leads to accurate predictions.

165. Policy-oriented economists seek to develop theories to

a.explain how things work so policies can be formulated.

b.describe what happened in a particular time period in history.

c.describe current economic events.

d.find correlations between events.

e.change people's values and ethics.

166. In the 19th century, Russian peasants noticed that during cholera epidemics there were lots of doctors around; in an attempt to eliminate cholera, they killed all the doctors. This is an example of

a.mistaking correlation with causation.

b.the fallacy of opportunism.

c.excessive abstraction.

d.rationality.

e.marginal analysis.

167. An economic model can be defined as

a.a testable claim which can be evaluated with proper data.

b.a representation of a theory or a part of a theory.

c.another word for theory.

d.a method to distinguish correlation from causation.

e.All of the above are correct.

168. Economists use models in order to

a.experiment with alternative circumstances.

b.make educated guesses about real life events.

c.predict outcomes under various hypothetical conditions.

d.increase understanding of how a relationship actually works.

e.All of the above are correct.

169. Why do economists tend to create models in diagrammatic form?

a.Diagrams hide reality, and theory is an attempt to avoid reality.

b.It is easier than building models out of physical objects.

c.Economic reality cannot possibly be represented except in diagrams.

d.Most economists are frustrated artists, and like to draw when possible.

e.All of the above are correct.

170. Is it possible to express an economic model in words without diagrams?

a.No, models can only be stated in diagrams.

b.No, the very definition of model requires mathematical form.

c.Yes, some of the simplest models are verbal statements.

d.Yes, although the best models always use diagrams.

e.Uncertain, economic theory has not answered this question yet.

Dec 16 2019 View more View Less

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