The term Ceteris paribus means that:

The term Ceteris paribus means that:
 a. everything is changing.
  b. all other things remain unchanged.
  c. no one knows which variables will change and which will remain constant.
  d. the basic principle of economics do not apply to the case being considered.

QUESTION 2

When economists use the term Ceteris paribus, they are indicating that:
 a. the relationship between two economic variables cannot be determined.
  b. the analysis is true for the individual but not for the economy as a whole.
  c. all other variables except the ones specified are assumed to be constant.
  d. their conclusions are based on normative economics rather than positive economic analysis.

QUESTION 3

Which of the following is most likely to represent causality rather than association?
 a. In years that fashion dictates wider lapels on men's jackets, the stock market grows by at least 5 percent.
  b. Interest rates are higher in years ending with a 1 or a 6.
  c. Unemployment falls when the AFC champion wins the Super Bowl.
  d. Quantity demanded goes up when price falls because lower prices increase consumer purchasing power, ceteris paribus.

QUESTION 4

To be valid, an economic model must:
 a. include every activity which occurs in the real world.
  b. include at least 85 percent of the activity which occurs in the real world.
  c. be able to predict events occurring in the real world.
  d. exclude any link to the real world.
  e. not be based on an abstraction of the real world.

QUESTION 5

To abstract from reality in an economic model means that:
 a. we include only a few of the essential aspects of reality.
  b. the economic study surveys only a very limited period of time.
  c. we include only those elements which support our hypothesis.
  d. the model includes every aspect of the real world.
  e. the model examines the actions of the consumers in the absence of producers and the government.