22) A scientific prediction is
A) not testable.
B) a prophesy of how the future will unfold.
C) a causal statement of the following form: A will occur because B occurred.
D) a conditional statement of the following form: if A occurs, then B will follow.
E) always based on the law of large numbers.
Answer: D
Diff: 2
Topic: 2.2b. testing theories
Skill: Recall
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
23) Of the following, which is the most important characteristic of a successful theory?
A) the theory provides a basis for facts about economic behaviour
B) the theory could never be refuted
C) the theory adequately explains all economic behaviour
D) all assumptions on which the theory is based are true
E) the theory allows us to predict behaviour reasonably accurately
Answer: E
Diff: 3
Topic: 2.2b. testing theories
Skill: Applied
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
24) The scientific approach to economic inquiry involves
A) choosing data that will support the predictions.
B) using only endogenous variables in economic models.
C) testing the predictions with empirical data.
D) testing the reality of the assumptions of the model.
E) using only independent variables.
Answer: C
Diff: 2
Topic: 2.2b. testing theories
Skill: Applied
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
25) Economics is scientific because
A) economists routinely conduct controlled experiments.
B) individual behaviour is predictable.
C) economists routinely conduct laboratory experiments.
D) economists use data.
E) economists test hypotheses by appealing to empirical evidence.
Answer: E
Diff: 2
Topic: 2.2b. testing theories
Skill: Recall
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
26) In order to test a theory, one must
A) develop a better explanation than the one presented.
B) present a series of normative statements and positive statements.
, C) use assumptions that most closely reflect reality.
D) develop normative statements from the law of large numbers.
E) confront the predictions of the theory with evidence.
Answer: E
Diff: 1
Topic: 2.2b. testing theories
Skill: Recall
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
27) Suppose that a particular theory predicts that on Monday, Wednesday, and Friday the stock market
will rise and that on Tuesday and Thursday the stock market will fall. If an economist tests this theory and
finds that over a six-month period the theory predicts accurately, the economist would likely say that the
theory
A) has been proven correct.
B) is reliable.
C) is not in conflict with the evidence.
D) shouldn't be taken seriously.
E) is not useful because stock markets involve irrational human behaviour.
Answer: C
Diff: 2
Topic: 2.2b. testing theories
Skill: Applied
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
28) If a theory's prediction is tested and is in conflict with the evidence,
A) the original data and assumptions should be discarded.
B) it is rejected with certainty, because it is not possible to reject a hypothesis that is actually true.
C) the statistical tolerance of risk for accepting a false hypothesis should be increased.
D) inquiry into the matter should cease.
E) a new hypothesis is usually suggested and tested.
Answer: E
Diff: 2
Topic: 2.2b. testing theories
Skill: Applied
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
29) As a science, economics is disadvantaged in that
A) it deals with human behaviour and thus is not open to empirical testing.
B) it is usually not possible to conduct controlled experiments in economics, in contrast with certain other
sciences.
C) economic hypotheses cannot be accepted with complete certainty, by contrast with the other sciences.
D) economic variables do not change enough to provide reliable data for testing hypotheses.
E) some economic variables are determined within the theory.
Answer: B
Diff: 2
Topic: 2.2b. testing theories
Skill: Applied
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
30) Most economists believe that economic analysis ________ be made completely free of judgement, in
A) not testable.
B) a prophesy of how the future will unfold.
C) a causal statement of the following form: A will occur because B occurred.
D) a conditional statement of the following form: if A occurs, then B will follow.
E) always based on the law of large numbers.
Answer: D
Diff: 2
Topic: 2.2b. testing theories
Skill: Recall
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
23) Of the following, which is the most important characteristic of a successful theory?
A) the theory provides a basis for facts about economic behaviour
B) the theory could never be refuted
C) the theory adequately explains all economic behaviour
D) all assumptions on which the theory is based are true
E) the theory allows us to predict behaviour reasonably accurately
Answer: E
Diff: 3
Topic: 2.2b. testing theories
Skill: Applied
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
24) The scientific approach to economic inquiry involves
A) choosing data that will support the predictions.
B) using only endogenous variables in economic models.
C) testing the predictions with empirical data.
D) testing the reality of the assumptions of the model.
E) using only independent variables.
Answer: C
Diff: 2
Topic: 2.2b. testing theories
Skill: Applied
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
25) Economics is scientific because
A) economists routinely conduct controlled experiments.
B) individual behaviour is predictable.
C) economists routinely conduct laboratory experiments.
D) economists use data.
E) economists test hypotheses by appealing to empirical evidence.
Answer: E
Diff: 2
Topic: 2.2b. testing theories
Skill: Recall
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
26) In order to test a theory, one must
A) develop a better explanation than the one presented.
B) present a series of normative statements and positive statements.
, C) use assumptions that most closely reflect reality.
D) develop normative statements from the law of large numbers.
E) confront the predictions of the theory with evidence.
Answer: E
Diff: 1
Topic: 2.2b. testing theories
Skill: Recall
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
27) Suppose that a particular theory predicts that on Monday, Wednesday, and Friday the stock market
will rise and that on Tuesday and Thursday the stock market will fall. If an economist tests this theory and
finds that over a six-month period the theory predicts accurately, the economist would likely say that the
theory
A) has been proven correct.
B) is reliable.
C) is not in conflict with the evidence.
D) shouldn't be taken seriously.
E) is not useful because stock markets involve irrational human behaviour.
Answer: C
Diff: 2
Topic: 2.2b. testing theories
Skill: Applied
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
28) If a theory's prediction is tested and is in conflict with the evidence,
A) the original data and assumptions should be discarded.
B) it is rejected with certainty, because it is not possible to reject a hypothesis that is actually true.
C) the statistical tolerance of risk for accepting a false hypothesis should be increased.
D) inquiry into the matter should cease.
E) a new hypothesis is usually suggested and tested.
Answer: E
Diff: 2
Topic: 2.2b. testing theories
Skill: Applied
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
29) As a science, economics is disadvantaged in that
A) it deals with human behaviour and thus is not open to empirical testing.
B) it is usually not possible to conduct controlled experiments in economics, in contrast with certain other
sciences.
C) economic hypotheses cannot be accepted with complete certainty, by contrast with the other sciences.
D) economic variables do not change enough to provide reliable data for testing hypotheses.
E) some economic variables are determined within the theory.
Answer: B
Diff: 2
Topic: 2.2b. testing theories
Skill: Applied
Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation.
User2: Qualitative
30) Most economists believe that economic analysis ________ be made completely free of judgement, in
