Question :
21) Choose the statement that best characterizes an economic theory. : 1384128
21) Choose the statement that best characterizes an economic theory. An economic theory
A) is only useful if its underlying assumptions are realistic.
B) will be useful as long as it is logically consistent.
C) must be judged on its ability to explain and predict real-world phenomena.
D) will predict more accurately if it contains a greater number of mathematical equations.
E) will be useful only if all human behaviour is rational.
22) Which of the following pairs of words have similar meanings?
A) induced and autonomous
B) endogenous and autonomous
C) independent and exogenous
D) dependent and exogenous
E) induced and exogenous
23) The statement that a country’s rate of GDP growth is influenced by individuals’ saving behaviour is an example of a(n)
A) variable.
B) prediction.
C) normative statement.
D) theory.
E) economic law.
24) Choose the answer that best explains why economists build models that abstract from the complexities of reality.
A) Because the complexities of reality are unimportant.
B) Because they believe they gain a greater understanding of reality.
C) Because economists are not interested in reality.
D) Because this allows economists to conduct controlled experiments to test their theories.
E) Because economics deals only in the abstract.
25) Suppose an individual wheat farmer’s income is influenced by the region’s average daily temperature. When examining the determinants of individual farmer income, the average daily temperature is a(n) ________ variable.
A) endogenous
B) exogenous
C) flow
D) dependent
E) induced
26) If we seek to explain the number of seats sold on a particular air route, say Toronto to Halifax, over a one-year period, we would consider many variables. Which of the following variables would be endogenous to our theory?
A) the average salary of Canadian airline pilots
B) the number of airline seats sold on this route
C) the price of jet fuel
D) the number of fog days in Halifax
E) the unemployment rate in Toronto
27) When an economist assumes that the owners of firms are motivated only by the desire to maximize profits, the economist most likely believes that
A) it doesn’t matter whether or not the assumption is descriptively accurate; what matters is whether a theory built on the assumption predicts well.
B) the assumption is descriptively accurate, since surveys have been taken and the owners of firms have admitted that their only objective is to maximize profits.
C) the assumption is inaccurate, since surveys have been taken and the owners of firms have admitted that they care about more than just profits.
D) individuals entering business are quite narrow in their personal objectives.
E) all people enter business for their own selfish gain.
28) An economic model that contains a highly realistic set of assumptions is
A) useful because there is then very little difference between “theory” and “reality.”
B) necessarily better able to predict the future.
C) certainly superior to a model whose assumptions are highly unrealistic.
D) more abstract than a model whose assumptions are further removed from reality.
E) not likely to be useful because of its particularized nature and its complexity.
29) Economists build models that abstract from the complexities of reality because
A) it is easier to do so.
B) they believe they gain a greater understanding of reality.
C) economists are not interested in reality.
D) economists do not understand the real world.
E) the complexities of reality are unimportant.
30) Suppose we have data for 1000 students for a period of one year. The data show that those students who spend more hours studying have a higher grade point average (GPA). We can say that
A) there is a positive correlation between hours of study time and GPA.
B) having a higher GPA leads students to spend more time studying.
C) there is a causal relationship between hours of study time and GPA.
D) more hours spent studying leads to a higher GPA.
E) if hours of study time increase, then GPA will automatically increase.
