Suppose an economics forecaster discovers that on days when the sunspot count is high stock market on the following day is bullish, that is stock market prices edge upwards
In addition, he also observes that on days with a low sunspot count the following day the stock market tends to be bearish, that is stock market prices tend to fall. The forecaster then concludes that there is a positive relationship between the sunspot count and stock market prices and proceeds to base his investment decisions on this premise. What kind of an error has this forecaster made?
The forecaster has fallen into the post hoc fallacy. Simply because one set of events precedes another is not enough to say that one is the cause of the other.
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Joe's Taco Hut can purchase a delivery truck for $20,000 and Joe estimates it will generate a net income (after taxes, maintenance and operating costs) of $4,000 per year. His other option is to go to work for someone else earning net income of $3,000 per year. He should:
A. purchase the truck if the real interest rate is less than 5%. B. not purchase the truck if the real interest rate is greater than 1%. C. purchase the truck if the real interest rate is less than 15%. D. purchase the truck if the real interest rate is greater than 5%.
A sole proprietorship is limited to how many owners?
A) 1 B) 2 C) 10 D) There is no limit to the number of owners.
Does an increase in the demand for Introductory Economics increase the cost to students of taking the course?
A) No, because tuition rates are not set to clear the market.
B) Not if the college refuses to hire additional people to teach the course.
C) Yes, if the course is consequently taught in a larger room, which costs more to heat.
D) Yes, insofar as students have to accept less satisfactory class schedules in order to take the course.
The application of Keynesian economics to public finance and fiscal policy by Abba Lerner, and its incorporation into Paul Samuelson's economic principles textbook, was known as procyclical finance.
Answer the following statement true (T) or false (F)