Macro Second Homework (Final)

The following statement is identified by what category of correlation: The firm employs more factors of production if there is an increase in the demand for its product.

Positive correlation

The following statement is identified by what category of correlation: The more money Kat​ saves, the more financially secure she feels.

Positive correlation

What is meant by randomization in the context of an economic​ experiment? A. Eonomic experiments are not arranged in a logical sequence. B. Group numbers are arranged in a nonsequential order. C. Subjects are assigned by​ chance, rather than by​ choice, to a group. D. Subjects are assigned to control and test groups by noneconomic factors such as race.

C

Which of the following do you provide as a positive​ question? A. Who is the most to blame for the national​ debt? B. Will our high national debt lead to a breakdown of family​ values? C. How much is the national​ debt? D. Is passing on a high national debt to our children an immoral​ act?

C

Which of the following examples do you provide as a normative​ question? A. How many people are on food​ stamps? B. How much does welfare drive up the​ deficit? C. Should welfare be​ repealed? D. What is the rate of change of disability​ enrollment?

C

Which of the following factors does correlation and causality have in​ common? A. The change in variables is sequential. B. It can be​ positive, negative or zero. C. It represents the relation between variables. D. There is nothing in common between them.

C

Which of the following is least likely to be a question or study of economic​ concern? A. What are the benefits to Tampa Bay of hosting the Super​ Bowl? B. Is anything really​ free? C. What is the motivation of the Red​ Cross? D. How connected is productivity and​ wage?

C

Which of the following is not true about economic​ models? A. A model is only an approximation. B. They can be highly complex and based on lengthy mathematical analysis. C. They are not​ useful, since they do not include all variables. D. Models are not perfect replicas of reality.

C

Which of the following questions is not an example of an issue a researcher could study to contribute to the welfare of​ society? A. What will be the turnout of the next Woody Allen film in​ theaters? B. What will be the side effects of watching television on a​ child? C. What combination of colors can one use to paint his bedroom​ wall? D. What is the average unemployment age group in a​ country?

C

Which type of experiment is likely to yield more accurate​ results? A. ​Randomized, because a natural experiment may be completely influenced by chance. B. ​Natural, because there could be an omitted variable. C. ​Randomized, because a natural experiment may not be completely randomized. D. ​Natural, because there could be reverse causality.

C

Suppose you have just been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. During a meeting with your​ client, the CEO asks if your economic models include all factors that impact gasoline prices. What is your response to his​ question? A. ​No, since the economic convention is to limit inclusion to the top three variables. B. ​Yes, the model includes every result from related academic papers and all industry expertise. C. ​Yes, the model includes all factors. D. ​No, the model is a simplified representation of reality.

D

Natural experiment

These are cases where some outside event, beyond the control of the economists involved or the subjects, allows us to a test a theory, random or nearly random

Continued from Q19 *Debbie, a member of your​ team, advocates finding random people and then breaking them up into two groups. Group A would be shown an increase in the price of gas before taking the survey. Group B would be told there was no increase in the price of gas before taking the survey.​ Troy, another member of your​ team, recommends finding two groups of people already sorted by whether or not they have recently noticed an increase in the price of gas. -​Debbie's method is a _______ and​ Troy's method is a _______. -Group A is the _______ and Group B is the _______.

controlled experiment: natural experiment; treatment group: control group

empirical evidence

facts that are obtained through observation and measurement

The scientific method uses _________ for setting forth predictions and ________ to support or deny them. It is more important for a model to be _______ than _______.

hypotheses: data; usable: accurate

randomization

the assignment of subject by chance

negative correlation

two variables tend to move in opposite directions

positive correlation

two variables tend to move in the same direction

Suppose that you are on a date with an economics​ major, and you want to impress them by talking about economics. Your date challenges you to state your knowledge of positive and normative questions. You say that positive questions ask _______ and normative questions ask _______.

what is or what will be; what out to be

zero correlation

when two variables are not related

Some people go to a new gym because it just happened to open up right next to where they live.People who live farther away do not go to this new gym as much.You compare fitness between these two groups. Using the concept of a natural​ experiment, which of the following statements is true about the​ scenario? A. This is a good natural experiment. B. This is a decent natural experiment. C. This is not a natural experiment.

A

Suppose you had to find the effect of seatbelt rules on road accident fatalities. Would you choose to run a randomized experiment or would it make sense to use natural experiments​ here? Explain. A. ​Randomized, because seatbelt rules may be influenced by road accident fatalities. B. ​Natural, because seatbelt rules may increase road accident fatalities. C. ​Randomized, because natural experiments with seatbelt rules may exist. D. ​Natural, because seatbelt rules may be unrelated to road accident fatalities.

A

Correlation

-two variables are related, however the relationship has to do with a third variable that is actually driving the results. -two variables tend to change at the same time

Q: Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your client would like your team to perform a study on​ customers' gasoline purchasing habits when they notice an increase in the price of gas. You have access to the following groups of​ people: *Group Description/ Number in Group -People who have not noticed a​ gas-price increase/ 50 -People who drive electric cars/ 35 -People who have recently noticed a​ gas-price increase/80 -People who ride their bikes to work/ 20 -People who ride the bus/ 100 To set up your experiment on how​ price-increase awareness impacts customer​ behavior, you would have _______ people in your treatment group and _______ people in your control group.

80;50

Continued from Q5 Your client becomes critical of your​ "sloppy" technique of using a model that does not include all factors. What is the most appropriate reply to this​ criticism? A. Economic models are meant to be approximations that predict what happens in most circumstances. B. Even a simplified economic model can provide two standard deviations accuracy. C. Economic models are meant to exactly predict each and every outcome by using all variables. D. Even a simplified economic model can provide 99 percent accuracy.

A

Give an example of a pair of variables that have negative correlation. A. The number of winter coats sold and the temperature outside. B. The color of a​ person's shirt and the number of meals sold at Chinese restaurants. C. The number of physicists and the speed of sound. D. The quantity of fertilizers used and crop yield.

A

How does a natural experiment differ from a randomized​ one? A. A natural experiment uses existing​ variation, while a randomized experiment generates variation. B. Natural experiments are not influenced by omitted​ variables; randomized experiments contain omitted variables. C. A natural experiment is​ expensive, while a randomized experiment is cheap. D. A natural experiment generates​ variation, while a randomized experiment uses existing variation.

A

In which of the following situations does the correlation imply​ causality? A. Samuel cooks beef ribs in the oven. B. The results of the school level survey indicate that the students who​ didn't study end up getting bad​ grades, but it does not take into account any health issues that may affect the​ students' performances during the exam. C. A recent college graduate will find it harder to get a job than a person with more​ experience; however, he​ can't gain experience until he is employed. D. The law of demand states that other factors such as income and price of related commodities being​ equal, there is an inverse relationship between the quantity demanded for a commodity and its price.

A

Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your client would like your team to perform a study on​ customers' gasoline purchasing habits when they notice price increases. You suggest that the team​ _____________. A. design and execute an experiment. B. utilize artificial intelligence to model human behavior. C. collect competitor data. D. develop a model that allows for scenario analysis.

A

Which of the following is not an important property of an economic​ model? A. It predicts actual results over half the time. B. It is based on a theoretical construct. C. It makes predictions that can be tested with data. D. It predicts what would happen on average.

A

Which of the following is the best example of causation​ (versus correlation)? A. Oil prices go up and gasoline prices go up. B. Ice cream sales and the number of drownings. C. ​Women's skirts get shorter and the stock market goes up. D. The groundhog sees its shadow and winter lasts longer.

A

Which of the following statements regarding economic questions is not​ correct? A. The questions must have implication on​ individuals' choices and their budget. B. The questions should contribute to the welfare of society. C. The questions should be associated with some economic research. D. The questions should be such that they can be answered with past data.

A

How does the sample size affect the validity of an empirical​ argument? A. The sample size is not relevant if it is greater than 50. B. The larger the sample size the better. C. The smaller the sample size the better. D. The sample size is not relevant if it is greater than 30.

B

All of the following statements about means and medians are​ true, except A. the mean is another term for average. B. a median uses a mean with even number observations. C. the median is more skewed by extreme values. D. a mean sample would gain more accuracy with more observations.

C

Empiricism is a principle in economics that​ _________. A. aggregates data to create graphs. B. gathers data using surveys. C. uses data to test economic models. D. collects data using the scientific method.

C

The following statement is identified by what category of correlation: As the temperature​ decreases, more heaters are purchased.

Negative correlation

The following statement is identified by what category of correlation: Mr. Williams received a promotion when he was diagnosed with diabetes.

Zero correlation

controlled experiment

an independent variable is the only factor that is allowed to be adjusted with the dependent variable as the factor that the independent variable will affect.

Causation

one variable influences the other

*Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your client has requested that your consulting team expatiate on the factors that impact gasoline prices. One of the members of your​ team, Debbie, states that she has noticed that gasoline prices seem to rise in years when a National League baseball team wins the World Series. -You _______ include this observation in your report because it is _______. -In this​ case, correlation does not equal causation most likely due to _______.

should not: correlation, not causation; omitted variables

*In general people with more education earn higher salaries. Economists have offered two explanations of this relationship. The human capital argument says that high schools and colleges teach people valuable​ skills, and employers are willing to pay higher salaries to attract people with those skills. The signaling argument says that college graduates earn more because a college degree is a signal to employers that a job applicant is​ diligent, intelligent, and persevering. -The ___________ implies that a college student who drops out of school one month before graduation should earn much less than a student who graduates. -The ___________ implies that a college student who drops out of school one month before graduation should earn almost the same as a student who graduates.

signaling argument; human capital argument

Continued from Q5 and Q6 He is still unconvinced about the reliability of using economic models to make business decisions. You can answer this concern by sharing that you will confirm the accuracy of the model by ________ with ________.

testing its predictions; empirical data