The Scientific Method and the Tools of Economics Are Useful

question 147

Multiple Choice

The scientific method and the tools of economics are useful in examining

• A) only how individuals make decisions.
• B) only how business firms make decisions.
• C) only how government policies affect macroeconomic outcomes.
• D) only the trade-offs evident in the production possibilities frontier (PPF).
• E) anything; economists will use their tools to study anything in the world around them.

---

Definitions:

Variation

The measure of the spread or dispersion of a set of values.

Standard Error Of Estimate

A measure of the accuracy of predictions made with a regression line, specifically, it estimates the standard deviation of the error term.

Coefficient Of Determination

A measure used in statistical analysis to assess the goodness of fit of a model, represented as the proportion of variance in the dependent variable that is predictable from the independent variable(s).

Pearson Correlation Coefficient

A measure of the linear correlation between two variables X and Y, giving a value between -1 and 1 which indicates the strength and direction of the correlation.