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Questions and Answers
The consumption function directly correlates aggregate consumption expenditure with aggregate disposable income.
True
Aggregate demand is only influenced by consumption and investments.
False
Forecasting the value of one economic variable based on the value of another is not a common practice in economics.
False
Economics does not involve studying relationships among economic variables.
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Quantitative research with econometric tools is not useful for answering economic questions.
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Econometric tools help in applying economic theory to real problems and testing their applicability.
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Without the ability to forecast the growth of the economy, central bankers could not make informed decisions on when to stimulate or cool off the economy.
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Econometrics primarily focuses on measuring relationships between economic variables and not on analysis or decision-making processes.
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Empirical data that confirm the relationship proposed by economic theory always lead to acceptance of the theory as valid.
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The term 'econometrics' is derived from two Latin words, 'Econo' meaning economy and 'metrica' meaning measurement.
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