AACSB: Analytical Thinking
Status: New
For the following, please answer "True" or "False" and explain why.
19) Normative analysis offers decision makers the most valuable information when choosing among alternatives.
Answer: False. Normative analysis states subjective goals but not how those goals can be achieved. To choose among alternatives a decision maker uses positive analysis.
Skill: Analytical
AACSB: Analytical Thinking
Status: Old
20) If a model fits reality but doesn't generate testable predictions, it is of little value to economists.
Answer: True. If the model doesn't deliver testable predictions it cannot be tested against competing models.
Skill: Analytical
AACSB: Analytical Thinking
Status: Old
21) If actual experience supports two competing theories, then both theories are proven to be true.
Answer: False. Neither theory can be rejected but if they are competing, then the test is inconclusive.
Skill: Analytical
AACSB: Analytical Thinking
Status: Old