Tools Used by Economists

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What is one of the most effective tools that economists use?

The ethical method

The scientific method (correct)

The legal method

The historical method

What does the scientific method involve?

Analyzing data before posing a question

Evaluating the hypothesis before developing it

Developing speculations and theories without evidence

Conducting studies to collect information (correct)

Why do economists need a set of tools?

To complicate decisions

To simplify economic events (correct)

To avoid examining economic events

To complicate economic events

What is the main purpose of graphs for economists?

To simplify and visualize economic data Signup and view all the answers

What is one step in the scientific method?

Conducting studies to collect information Signup and view all the answers

What is an economic model used for?

To simplify and represent economic events Signup and view all the answers

What is an economist's primary challenge when testing theories?

Lack of experimental data Signup and view all the answers

How do economists compensate for the lack of experimental data?

By analyzing existing and historical data Signup and view all the answers

What did the repeal of the law on national maximum speed limit allow economists to do?

Analyze how transportation costs varied before and after the speed limit changed Signup and view all the answers

How do economists use graphs to simplify the complex world?

To represent the relationship between two sets of data visually Signup and view all the answers

What do economists refer to as homo economicus?

A model for understanding human behavior in economics Signup and view all the answers

What is the primary purpose of an economic model?

To provide a simplified representation of reality Signup and view all the answers

In which year did Congress repeal the law on national maximum speed limit?

1995 Signup and view all the answers

What is the significance of the curve in Graph 3 (Figure 1.3)?

It represents the relationship between education and income Signup and view all the answers

"One of an economist’s most important tools is the graph" can be found in which section of the text?

Section on Graphs: Two-Dimensional Representations of a Three-Dimensional World Signup and view all the answers

What type of line is considered a curve on a graph?

Straight lines and curved lines are both considered curves on a graph. Signup and view all the answers

How did the repeal of the law on national maximum speed limit impact economists?

It gave economists the chance to analyze how transportation costs varied before and after the speed limit changed. Signup and view all the answers

What is the rational-behavior model based on?

The pursuit of self-interest as described by Adam Smith Signup and view all the answers

What does the rational-behavior model not deal with?

Social values like charity Signup and view all the answers

What does 'ceteris paribus' mean in the context of economics?

Other relevant factors remaining unchanged Signup and view all the answers

What is the purpose of using 'ceteris paribus' in economic models?

To focus on understanding one aspect of the mystery Signup and view all the answers

In what way do economic models aid in making predictions?

By examining effects one change at a time Signup and view all the answers

What is the theory behind the rational-behavior model?

People make decisions based on their own self-interest Signup and view all the answers

What does the rational-behavior model work well at predicting?

How people generally react to incentives or use cost-benefit analyses Signup and view all the answers

According to the passage, why do economists create models?

To explain and predict how the economy operates Signup and view all the answers

What does the invisible hand concept refer to?

'Invisible hand' guiding self-interested market activity Signup and view all the answers

What does Adam Smith's description imply about the businessperson's intentions?

He intends only his own gain and is led by an 'invisible hand' to promote an end beneficial for society. Signup and view all the answers

What is the primary purpose of economic models according to the passage?

To aid in examining effects one change at a time and making predictions about the consequences of that change. Signup and view all the answers

What is the invisible hand concept in Adam Smith's description?

Self-interested market activity ends up benefiting all of society. Signup and view all the answers