economic methodology

Question 1

what is a positive statement

Answer 1

a statement that is based on facts that can be proven

Question 2

example of a positive statement

Answer 2

paying your workers more will decrease production and shift supply to the left

Question 3

what is a normative statement

Answer 3

the statement is based on that persons beliefs / opinion

Question 4

example of a normative statement

Answer 4

taxes should be lower ( this statement isn’t backed up they are just expressing their opinion)

Question 5

why do we use math in econ

Answer 5

it allows us to create meaningful testable equations that represent complex subjects in the real world

Question 6

how to find the slope

Answer 6

change in y over the change in x if the line is going down then make sure the number is negative

Question 7

absolute increase

Answer 7

this is the face value increase of for example income raises form 40 to 80 the absolute increase is 40 dollars

Question 8

relative increase

Answer 8

this is when we look past face value for example income goes from 20 to 60 dollars the realative increase will be that the income tripled

Question 9

comparing absolute increase

Answer 9

the only way you can compare it is if they are the same unit or the same price

Question 10

comparing relative increase

Answer 10

you can compare stuff relatively no matter how different the stuff is (can be different units)

Question 11

what is a index

Answer 11

the absolute value divided by the absolute value in base period multiplied by 100

Question 12

what is a linear function

Answer 12

functions in the form of y= mx + b linear functions have a constant slope

Question 13

what is a nonlinear function

Answer 13

functions with slopes that arent constant the line curves up or down

Question 14

maximum of a function

Answer 14

the highest point of the function

Question 15

minimum of a function

Answer 15

the lowest point of the function

Question 16

relative maximum

Answer 16

in the radius of that point it seems to be the highest point

Question 17

relative minimum

Answer 17

in the radius of that point it seems to be the lowest point

Question 18

time series plot

Answer 18

its a collection of values of the same variable measured at different periods of time. time is on the x axis and the values of the variable is on the y axis

Question 19

seasonal fluctuations

Answer 19

changes that consistently occur a certain periods of time

Question 20

trend

Answer 20

the overall average direction of change of the graph

Question 21

cyclical fluctuations

Answer 21

random periods of rapid expansion or contractions like bull runs and market crashes

Question 22

endogenous

Answer 22

the thing that exogenous stuff has a effect on for example corn is endogenous because its production is dependent on the endogenous variable in the model

Question 23

exogenous

Answer 23

this is the thing that effects the endogenous variable outside the model

Question 24

Economists build models that abstract from the complexities of reality because

Answer 24

they believe they gain a greater understanding of reality.

Question 25

if a model is made and after trying it the data is in conflict with the theory they should

Answer 25

modify the theory in light of this newly acquired empirical knowledge.

Question 26

examples of endogenous variable

Answer 26

anything that is produced or made ie plants, cows, corn etc. baiscally stuff that shifts the demand curve and supply curve

Question 27

example of exogenous

Answer 27

anything that effects production eg weather, earthquake, etc

Question 28

what is a theory

Answer 28

a explanation to predict what we are observing

Question 29

what describes the relationship of positive and normative statements

Answer 29

normative statements evaluate desirability and opinion positive doesn’t it evaluates facts

Question 30

When studying economic data, and when comparing the magnitude of changes in variables with different scales it is best to

Answer 30

express each variable as an index number.