Macroeconomists Cannot Conduct Controlled Experiments, Such as Testing Various Tax

question 7

Multiple Choice

Macroeconomists cannot conduct controlled experiments, such as testing various tax and expenditure policies, because:

• A) it is against the law.
• B) they tried it once and it did not work.
• C) they must make use of the data history gives them.
• D) economists already know the answers that would come out of the experiments.

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Definitions:

Population Parameter

A numerical value that represents a characteristic of a population, such as its mean or variance.

Hypothesis

A proposed explanation for a phenomenon, made as a starting point for further investigation.

Assumption

A basic condition or premise considered to be true without verification or proof, often used as a starting point for further analysis.

Power Curve

A graph of the probability of rejecting H0 for all possible values of the population parameter not satisfying the null hypothesis. The power curve provides the probability of correctly rejecting the null hypothesis.