3.1.1.1 Economic Methodology

What does the ceteris paribus assumption mean in economic models?

• "All other things being equal"

• "Only one variable changes"

• "All variables change"

• "No variables are constant"

Which of the following is an example of a positive statement in economics?

• "We need more economic reforms."

• "Income inequality is harmful to society."

• "The government should increase the minimum wage."

• "An increase in the minimum wage will lead to higher unemployment among low-skilled workers."

What distinguishes economics from natural sciences?

• Economics deals with human behaviour.

• Economics uses only qualitative data.

• Economics has no theoretical models.

• Economics does not use empirical observation.

Which model is used to understand how changes in economic activity affect employment, inflation, and growth?

• Aggregate demand-aggregate supply model

• Rational choice model

• Supply and demand model

• Behavioral economics model

What is the primary focus of macroeconomic models?

• Overall level of economic activity

• Individual consumer behavior

• Specific market transactions

• Corporate finance strategies

Which statement is an example of a normative statement in economics?

• "A decrease in taxes can lead to economic growth."

• "The government should increase the minimum wage to reduce income inequality."

• "Higher interest rates reduce inflation."

• "Unemployment rates have increased."

How are economic models useful?

• They focus solely on historical data.

• They eliminate the need for empirical data.

• They provide exact predictions for individual behaviors.

• They simplify complex real-world situations.

What role do value judgments play in economic decision making?

• They reduce the need for empirical observation.

• They influence priorities and policy decisions.

• They provide objective data for analysis.

• They are irrelevant in modern economics.

Why is economics considered a social science?

• It is purely theoretical.

• It does not involve empirical methods.

• It only uses mathematical models.

• It studies human behavior and decision-making.

What is a key difference between economics and other social sciences?

• Economics does not consider social factors.

• Economics often assumes rational and self-interested behavior.

• Economics exclusively uses controlled experiments.

• Economics does not use data analysis.