Chapter 2: Economic methods Flashcards
1
Q
Steps of the scientific method
A
- Developing models that explain some part of the world
2. Testing those models using data to see how closely the model matches what we actually observe
2
Q
Two important features of models
A
1 They are not exact
2. They generate predictions that can be tested with data
3
Q
What is correlation?
A
When 2 things are related
4
Q
What is positive correlation?
A
When 2 things change in the same direction
5
Q
What is negative correlation?
A
When 2 things change in opposite directions
6
Q
What is causation?
A
When one thing directly affects another
7
Q
What are omitted variables?
A
a variable that contribute to cause and effect of something
8
Q
What is reverse causality?
A
when there is cause and effect but it goes in the opposite direction as we thought
