Refer to Scenario 1.2 below to answer the question(s) that follow.SCENARIO 1.2: A scientist wants to understand the relationship between automobile emissions and the level of global warming. The scientist collects data on the volume of automobile emissions and the levels of global warming over time. The scientist concludes that a 1% increase in automobile emissions causes a 0.0003% increase in average global temperatures. From this information he concludes that the automobile emissions are harmful to the environment and should be reduced to stop the increase in global temperatures.Refer to Scenario 1.2. The statement that an increase in automobile emissions causes an increase in global warming is an example of
A. deductive reasoning.
B. a fallacy.
C. an economic theory.
D. normative economics.
Answer: C
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One way of describing the solution that high net worth provides to the moral hazard problem is to say that it
A) collateralizes the debt contract. B) makes the debt contract incentive compatible. C) state verifies the debt contract. D) removes all of the risk in the debt contract.
The idea of horizontal equity in taxation implies that
a. equally situated individuals should be taxed equally. b. unequally situated individuals should be taxed unequally. c. benefits should be given first to those individuals who need them most. d. the greatest tax burden should be borne by the wealthiest individuals.
Which of the following is most likely to represent causality rather than association?
A. In years that fashion dictates wider lapels on men's jackets, the stock market grows by at least 5 percent. B. Interest rates are higher in years ending with a 1 or a 6. C. Unemployment falls when the AFC champion wins the Super Bowl. D. Quantity demanded goes up when price falls because lower prices increase consumer purchasing power, ceteris paribus.
Which of the following is assumed in constructing a typical production possibilities curve?
A. The economy is using its resources inefficiently. B. Resources are perfectly shiftable among alternative uses. C. Production technology is fixed. D. The economy is engaging in international trade.