What is meant by saying that economics is an empirical science?
A) Economic theories will be tested by seeing how well they correspond to people's declared preferences.
B) Economic theories cannot be tested because there is no means of measuring economic variables with adequate precision.
C) Economic theories cannot be tested because economic variables change too quickly.
D) Economic theories will be tested by seeing how well they correspond to real-world phenomena.
Answer: D
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In practice, the three measurements of inflation, the CPI, PPI, and GDP deflator:
A. all closely track each other. B. are all positively correlated. C. all measure inflation, but focus on different parts of the economy. D. All of these statements are true.
If the demand for a product increases as the result of an increase in income, it can be concluded that the
a. product is an inferior good. b. demand for the product is inelastic. c. price elasticity of demand for the product equals unity. d. product is a normal good.
One application of the production possibilities concept has been to explain the difference in growth patterns of a nation with a high level of investment (Alta) and an equivalent nation with a low level of investment (Zorn). Use the concept to explain
why Alta’s economic growth would be greater than that of Zorn over time. Please provide the best answer for the statement.
When income is $15,000, the amount of income taxes owed is $1,500; when income increases to $20,000, the amount owed increases to $3,000. The average income tax rate when a person earns $15,000 is
A. 10 percent. B. 20 percent. C. 75 percent. D. 13.3 percent.