Assume that the research team of a major company is building a model of consumer demand that contains approximately 250 variables. Can you think of a principle that might be violated here that was discussed in chapter 1? Explain
What will be an ideal response?
The principle that is probably being violated is Ockham's Razor. This is the idea that irrelevant data should be cut away. With 250 variables it is very likely that many of them are unnecessary and will only make the model more complicated.
You might also like to view...
The total collection of pieces of property that serve to store value is a person's
A) wealth. B) income. C) money. D) credit.
Tobin's q is
A) the ratio of a firm's market value on the stock and bond markets to the replacement cost of its capital stock. B) the ratio of a firm's gross investment to its capital stock less its replacement cost of capital. C) a firm's replacement cost of capital less its value on the stock and bond markets. D) the ratio of a firm's replacement cost of capital to its gross investment.
In the year 2003, with people focusing on television, the Internet, and talk show radio for their news and entertainment, the unemployed printing press operator is an example of
a. structural unemployment b. concealed unemployment c. frictional unemployment d. underemployment e. cyclical unemployment
The money supply is 4,000 . nominal GDP is 8,000 . and real GDP is 2,000 . Which of the following is 2?
a. the price level and velocity. b. the price level but not velocity. c. velocity but not the price level. d. neither the price level nor velocity.