Q: What is the formula for calculating an index number for a given period?

$\text{Index in given period} = \frac{\text{Absolute value in given period}}{\text{Absolute value in base period}} \times 100$

Question 1

Which of the following is a normative statement?

Accepted Answer

Canada should increase its minimum wage to reduce poverty.

Question 2

In economic theory, which type of variable is explained within the theory itself?

Accepted Answer

Endogenous variable

Question 3

Suppose an economist claims, 'If the government increases taxes, consumer spending will decrease.' What type of statement is this?

Accepted Answer

Positive statement

Question 4

Which of the following best describes the process of testing an economic theory?

Accepted Answer

Comparing the theory's predictions with empirical evidence

Question 5

What is the formula for calculating an index number for a given period?

Accepted Answer

$	ext{Index in given period} = \frac{	ext{Absolute value in given period}}{	ext{Absolute value in base period}} 	imes 100$

Question 6

A scatter diagram is most useful for:

Accepted Answer

Showing the relationship between two variables for multiple observations

Question 7

If two variables are positively correlated, which of the following is true?

Accepted Answer

They move together in the same direction

Question 8

Which statement about correlation and causation is correct?

Accepted Answer

Correlation means two variables move together, but does not prove one causes the other

Question 9

Economists often cannot conduct controlled experiments. Which method have some economists recently adopted to address this limitation?

Accepted Answer

Randomized controlled trials (RCT)

Question 10

Given the consumption function $C = 800 + 0.8W$, where $C$ is consumption and $W$ is wage income, what is the marginal propensity to consume?

Accepted Answer

$0.8$

Question 11

Which of the following is an example of cross-sectional data?

Accepted Answer

Average house prices in 10 provinces in 2021

Question 12

If the slope of a straight line is calculated as $\frac{\Delta Y}{\Delta X}$, what is the slope between points A and B if $Y$ decreases by 1000 and $X$ increases by 2000?

Accepted Answer

$-0.5$

Question 13

Which of the following best describes a non-linear function in economics?

Accepted Answer

The slope changes as the value of the independent variable changes

Question 14

A function with diminishing marginal response means:

Accepted Answer

Each additional unit of the independent variable results in a smaller increase in the dependent variable

Question 15

Why is the distinction between positive and normative statements important in public policy debates?

Accepted Answer

It clarifies whether advice is based on facts or value judgments

Question 16

Which of the following is NOT a typical place where economists work?

Accepted Answer

Hospitals

Question 17

If a time-series graph shows the unemployment rate in Canada from 1978 to 2021, what type of data is being represented?

Accepted Answer

Time-series data

Question 18

Which of the following is a key step in the scientific approach to economics?

Accepted Answer

Refining theories based on empirical testing

Question 19

Suppose the Consumer Price Index (CPI) in the base year is 100, and the absolute value of the CPI in the current year is 125. What is the index value for the current year?

Accepted Answer

$125$

Question 20

Which of the following best describes the role of assumptions in economic theories?

Accepted Answer

They simplify reality to make analysis possible

Economic Theories, Data, and Graphs: Foundations for Economic Analysis

Study Guide - Practice Questions

Study Guide - Flashcards