What does it mean to say economics is an empirical science, and how is this related to the question of deciding on the usefulness of a model?
What will be an ideal response?
Economists examine evidence to test whether a model is useful or not. That is, real-world data are studied to see if they conform to the predictions of the model. A model is useful if it generates testable predictions and implications for the real world. A model that predicts better is generally considered a better model.
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The belief that the government can do absolutely nothing in either the short run or the long run to reduce the unemployment rate, because people will anticipate the government's actions, is held by the
The structural change that accompanies the early stages of development can be characterized as
a. an increased percentage of output in manufacturing at the expense of agriculture and services b. an increased percentage of output in services at the expense of agriculture and manufacturing c. an increased percentage of output in agriculture at the expense of manufacturing and services d. an increased percentage of output in agriculture and manufacturing at the expense of services e. none of the above
You turn to the bond market page of a newspaper and look under the column headed "Net Chg" and see that it says, "-1/4" this indicates that
A) the closing price for the bond on this particular day was $2.50 lower than on the previous day. B) the closing price for the bond on this particular day is $0.25 lower than on the previous day. C) the yield for the bond has fallen by 0.25% compared to the previous day. D) the yield for the bond has fallen by 0.25% compared to exactly one year ago.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y1. C. P3 and Y1. D. P3 and Y2.