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Chapter 2 Thinking Like an Economist




Question;19. The most common data for testing economic theories come from;a.;carefully;controlled and conducted laboratory experiments.;b.;computer;models of economies.;c.;historical;episodes of economic change.;d.;centrally;planned economies.;20. In conducting their research, economists often substitute historical;events and historical episodes for;a.;theories;and observations.;b.;laboratory;experiments.;c.;models.;d.;assumptions.;21. For economists, substitutes for laboratory experiments often come;in the form of;a.;natural;experiments offered by history.;b.;untested;theories.;c.;?rules;of thumb? and other such conveniences.;d.;reliance;upon the wisdom of elders in the economics profession.;22. Economists regard events from the past as;a.;irrelevant;since history is unlikely to repeat itself.;b.;of;limited interest, since those events seldom provide any useful economic data.;c.;interesting;but not particularly valuable, since those events cannot be used to evaluate;present-day economic theories.;d.;interesting;and valuable, since those events are capable of helping us to understand the;past, the present, and the future.;23. For economists, historical episodes;a.;are not;worthy of study because they offer few insights into current economic events;and problems.;b.;are not;worthy of study because laboratory experiments provide more reliable data.;c.;are;worthy of study because economists rely entirely on observation, rather than;on theory.;d.;are;worthy of study because they serve as valuable substitutes for laboratory;experiments.;24. Historical episodes are;a.;valuable;to economists because they allow economists to see how the science of;economics has evolved.;b.;valuable;to economists because they allow economists to evaluate economic theories.;c.;not of;concern to economists because economics is about predicting the future, not;dwelling on the past.;d.;not of;concern to economists because the exact circumstances of historical episodes;are unlikely to be observed again.;25. One thing economists do to help them understand how the real world;works is;a.;make;assumptions.;b.;ignore;the past.;c.;try to;capture every aspect of the real world in the models they construct.;d.;All of;the above are correct.;26. Economists make assumptions in order to;a.;mimic;the methodologies employed by other scientists.;b.;minimize;the number of experiments that yield no useful data.;c.;minimize;the likelihood that some aspect of the problem at hand is being overlooked.;d.;focus;their thinking on the essence of the problem at hand.;27. Economists make use of assumptions, some of which are unrealistic;for the purpose of;a.;teaching;economics to people who have never before studied economics.;b.;advancing;their political agendas.;c.;developing;models when the scientific method cannot be used.;d.;focusing;their thinking.;28. For an economist, the idea of making assumptions is regarded;generally as a;a.;bad;idea, since doing so leads to the omission of important ideas and variables;from economic models.;b.;bad;idea, since doing so invariably leads to data-collection problems.;c.;good;idea, since doing so helps to simplify the complex world and make it easier;to understand.;d.;good;idea, since economic analysis without assumptions leads to complicated;results that the general public finds hard to understand.;29. Economists make assumptions to;a.;provide;issues for political discussion.;b.;make a;complex world easier to understand.;c.;make it;easier to teach economic concepts and analysis.;d.;create;policy alternatives that are incomplete or subject to criticism.


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