What Is the "Omitted Variable" Problem in Determining Cause and Effect

question 212

Multiple Choice

What is the "omitted variable" problem in determining cause and effect?

• A)It is a problem that arises when an insignificant variable is given too much weight in an economic analysis leading to skewed conclusions about cause and effect.
• B)It is a problem that arises when a significant variable is not given enough weight in an economic experiment leading to skewed conclusions about cause and effect.
• C)It is a problem that arises when an insignificant economic variable that should have been omitted is included in an economic experiment leading to false conclusions about cause and effect.
• D)It is a problem that arises when an economic variable that affects other variables is omitted from an analysis and its omission leads to false conclusions about cause and effect.

Understand the economic policies that contributed to the recovery from the Great Depression.

Identify and describe the role of automatic stabilizers in the economy.

Comprehend the perspectives of classical and Keynesian economists on the economy.

Analyze the impact of fiscal policy on economic stability.

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