An approach to economics that applies statistical techniques and data to economic problems is called
A. normative economics.
B. empirical economics.
C. Ockham's razor.
D. laissez-faire economics.
Answer: B
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In a liquidity trap, the
A) IS curve is vertical. B) IS curve is horizontal. C) LM curve is vertical. D) LM curve is horizontal.
The government wishes to close an inflationary gap by reducing real GDP by $400 billion. Assuming a tax multiplier of 4 and an income multiplier of 5, which of the following policy prescriptions would reduce the inflationary gap by $400 billion?
a. Decreasing government spending by $400 billion and increasing taxes by $400 billion. b. Decreasing government spending by $160 billion and decreasing taxes by $100 billion. c. Decreasing government spending by $40 billion and decreasing taxes by $40 billion. d. Decreasing government spending by $80 billion and keeping taxes the same. e. Doing absolutely nothing to the economy.
When sportspeople record the speed of a pitch in baseball, they refers to its velocity. It is measured in miles per hour. When economists record the speed of a dollar, they refer to the velocity of money. It measures the
a. number of times per year each dollar is used to transact an exchange b. rapidity of the dollar price of a good or the rate of inflation c. number of times the price level increases during a year d. time it takes a bank to convert a check into dollars e. number of times per year each good, valued in terms of dollars, is purchased during the year
Cartel members have an incentive to cheat on cartel agreements because
a. the cartel cannot maximize profits. b. the cartel price is the competitive price. c. the demand curve for the firm is more elastic than the cartel's demand curve. d. the industry profit would be higher under competitive conditions.