Deck 2: Tools of Positive Analysis

Question 1

Unobserved influences on a regression are captured in the

A) error term.
B) parameters.
C) regression line.
D) regression coefficient.

Answer 1

error term.

Question 2

Positive economics

A) does not depend on market interactions.
B) only looks at the best parts of the economy.
C) examines how the economy actually works (as opposed to how it should work).
D) is very subjective.

Answer 2

examines how the economy actually works (as opposed to how it should work).

Question 3

Econometrics is the statistical analysis of economic data.

A) True
B) False
C) Uncertain

Answer 3

True

Question 4

A counterfactual is

A) what happens when there are no facts.
B) what would have happened if the treatment group had not received the treatment.
C) a legal term describing the process of proving that a negative is the actual truth.
D) none of these answer options are correct.

Question 5

Empirical analysis generally deals with theory and little data.

A) True
B) False
C) Uncertain

Question 6

Instrumental variables requires that the variable not be correlated with the outcome variable.

A) True
B) False
C) Uncertain

Question 7

It is possible that two different economists can examine the same situation,such as school funding,and reach entirely different conclusions.Why is this so?

Question 8

Regression coefficients are indicators of the impact of independent variables on dependent variables.

A) True
B) False
C) Uncertain

Question 9

The following can be analyzed using econometrics:

A) labor supply.
B) market demand.
C) tax-setting behavior.
D) poverty.
E) all of these answer options are correct.

Question 10

Economists attempt,with moderate success,to perform controlled experiments making policy analysis helpful.

A) True
B) False
C) Uncertain

Question 11

The slope of a regression line is calculated by dividing

A) the intercept by the change in horizontal distance.
B) the change in horizontal distance by the change in vertical distance.
C) the change in horizontal distance by the intercept term.
D) the change in vertical distance by the change in horizontal distance.
E) none of these answer options are correct.

Question 12

A model is a simplified description of some aspect of the economy.

A) True
B) False
C) Uncertain

Question 13

Panel data requires

A) data on individual entities.
B) time.
C) neither data on individual entities nor time.
D) both data on individual entities and time.

Question 14

An experimental study is one which individuals are randomly assigned to the treatment and control groups.

A) True
B) False
C) Uncertain

Question 15

Multiple regression analysis typically requires several computers.

A) True
B) False
C) Uncertain

Question 16

It has been suggested in the text that raising taxes on beer will reduce teen fatalities.Comment on this.

Question 17

"Since the social sciences are not like the natural sciences,experiments are a waste of time." Comment on the above statement.

Question 18

The substitution effect

A) is when individuals consume more of one good and less of another.
B) is associated with changes in relative prices.
C) will have no effect if goods are unrelated.
D) all of these answer options are correct.

Question 19

Causation and Correlation are generally the same thing.

A) True
B) False
C) Uncertain

Question 20

Discuss the concept in econometrics that states,"garbage in ...garbage out."

Question 21

Why might the consequences of imposing a tax on harmful fast foods not adhere to theory?