61. Which of the following is NOT a reason for economists using theories?
a.
to explain and help predict human behaviour
b.
to understand economic behaviour
c.
to develop a testable hypothesis
d.
to abstract from the complexities of the world
ANSWER:
c
62. Which statement most accurately describes the concept of economic theory?
a.
It should be as detailed as possible to best model the complexity of an economy.
b.
It is an abstraction from reality.
c.
It is only useful if it rests on realistic assumptions.
d.
It is unrealistic and therefore of questionable usefulness in explaining what occurs in a complex economy.
ANSWER:
b
63. What is the basis of a good economic theory?
a.
It explains economic behaviour and predicts well.
b.
It rests on assumptions.
c.
It always provides a highly detailed analysis of an economic sector.
d.
It can best be expressed mathematically.
ANSWER:
a
64. What is the basis of a good economic theory?
a.
It relies on simplifying assumptions in order to explain economic behaviour.
b.
It does not rely on simplifying assumptions.
c.
It includes every detail that affects the economic behaviour of interest.
d.
It relies on conducting uncontrolled experiments.
ANSWER:
a
65. An analogy can be made between developing an economic theory and which kind of consumer electronic product?
a.
a smartphone
b.
an LED television
c.
a GPS
d.
a car audio system
ANSWER:
c
66. How is an economic hypothesis tested?
a.
by comparing its prediction to real-world data
b.
by using a controlled experiment
c.
by assessing the realism of its assumptions
d.
by assessing the level of descriptive detail
ANSWER:
a
67. Which statement best describes testing an economic hypothesis?
a.
It can be tested using empirical analysis.
b.
It can be tested using normative analysis.
c.
It cannot be tested since it is normative in nature.
d.
It cannot be tested since it is a positive economic statement.
ANSWER:
a
68. What is a hypothesis?
a.
It is a normative economic statement.
b.
It is a testable proposition.
c.
It is a statement that cannot be evaluated using real-world data.
d.
It is a model with no connection to the real world.
ANSWER:
b
69. What is the difference between a theory and a hypothesis?
a.
A hypothesis is a testable proposition and is tentatively accepted as a theory.
b.
A hypothesis abstracts from reality while a theory describes reality.
c.
A theory is not an established explanation, but a hypothesis is.
d.
A theory abstracts from reality while a hypothesis describes reality.
ANSWER:
a
70. Which statement describes the chain of events involved in creating a theory?
a.
gather data, evaluate results, tentatively accept the theory, and support or refute the hypothesis
b.
select a theory, create a hypothesis, and evaluate the evidence
c.
formulate a hypothesis, gather data, evaluate the results, support or refute the hypothesis, and tentatively accept the theory
d.
predict behaviour, evaluate the results, and formulate a hypothesis
ANSWER:
c
71. Which of the following reflects the correct order for creating a theory?