Ch. 2 Economic Methods And Economic Questions Flashcards Preview

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Flashcards in Ch. 2 Economic Methods And Economic Questions Deck (23)
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1
Q

How does the sample size affect the validity of an empirical argument?

A

The larger the sample size the better.

2
Q

Suppose you have just been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. During a meeting with your client, the CEO asks if your economic models include all factors that impact gasoline prices. What is your response?

A

No, the model is a simplified representation of reality.

3
Q

What is meant by randomization in the context of an economic experiment?

A

Subjects are assigned by chance, rather than by choice, to a group.

4
Q

Causation occurs when there is ____

A

A logical cause and effect relationship.

5
Q

More police officers and lower crime rates is likely to be ____.

A

Causation

6
Q

More economic growth and higher employment levels is likely to be ____.

A

Causation

7
Q

The length of women’s skirts and stock market performance is likely to be ____.

A

Correlation

8
Q

The name of the ongoing process that economists, other social scientists, and natural scientists use to: develop models of the world and test those models with data.

A

Scientific method.

9
Q

A simplified description, or representation of the world.

A

Model

10
Q

Facts, measurements, or statistics that describe the world.

A

Data

11
Q

A set of facts established by observation and measurement.

A

Empirical evidence.

12
Q

Predictions that can be tested with data.

A

Hypothesis

13
Q

Occurs when one thing directly affects another.

A

Causation

14
Q

There is a mutual relationship between two things.

A

Correlation

15
Q

Implies that two variables tend to move in the same direction.

A

Positive correlation.

16
Q

Implies that two variables tend to move in opposite directions.

A

Negative correlation.

17
Q

Two variable that are not related.

A

Zero correlation

18
Q

Something that has been left out of a study that, if included, would explain why two variables are correlated.

A

Omitted variable.

19
Q

Occurs when we mix up the direction of cause and effect.

A

Reverse causality.

20
Q

A controlled method of investigating causal relationships among variables.

A

Experiment.

21
Q

The assignments of subjects by chance, rather than by choice, to a treatment group or to a control group.

A

Randomization.

22
Q

An empirical study in which some process out of the control of the experimenter has assigned subjects to control and treatment groups in a random or nearly random way.

A

Natural experiment.

23
Q

To say that economists use the scientific method means that they are using____.

A

An ongoing process to develop models of the world and then test and evaluate those models.