Which of the following statements about economic methodology is correct?
a. An economic law is a cause-and-effect relationship that has been verified by a controlled experiment.
b. The test of a theory's validity is its usefulness in explaining reality.
c. An economic law is a statement about group behavior that is based on the observed behavior of a single individual.
d. An economic law, because it is based on probabilities, can only be expected to be true about half the time.
e. Assumptions are ignored in the development of hypotheses.
B
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Which of the following goods is the most liquid?
A. House B. Saving deposit C. Painting by Monet D. Antique sword from WWI
If the Fed is going to create an environment for economic progress, it should focus on
A) the regulation of financial institutions in order to control excessive risk taking. B) keeping interest rates low. C) shifting back and forth between expansionary and restrictive monetary policy in order to better control the growth of real GDP. D) the achievement of price stability.
A monopoly produces widgets at a marginal cost of $10 per unit and zero fixed costs. It faces an inverse demand function given by P = 50 ? Q. What are the profits of the monopoly in equilibrium?
A. $600 B. $500 C. $300 D. $400
As you move down the production possibility frontier, the absolute value of the marginal rate of transformation
A. increases. B. initially decreases, then increases. C. decreases. D. initially increases, then decreases.