Chapter 2: Economic methods Flashcards

1
Q

Steps of the scientific method

A
  1. Developing models that explain some part of the world

2. Testing those models using data to see how closely the model matches what we actually observe

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2
Q

Two important features of models

A

1 They are not exact

2. They generate predictions that can be tested with data

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3
Q

What is correlation?

A

When 2 things are related

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4
Q

What is positive correlation?

A

When 2 things change in the same direction

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5
Q

What is negative correlation?

A

When 2 things change in opposite directions

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6
Q

What is causation?

A

When one thing directly affects another

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7
Q

What are omitted variables?

A

a variable that contribute to cause and effect of something

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8
Q

What is reverse causality?

A

when there is cause and effect but it goes in the opposite direction as we thought

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