1. We may accumulate evidence in support of an economic theory, but we can never prove beyond doubt that it is true.
2. Charts are a useful way of highlighting the important features of a data series.
3. When we observe a strong association between two variables we know that one depends casually upon the other.
4. Cross-section data are more often used in microeconomics because they deal with individuals.
5. Invoking other things equal enables us to ignore the complicated parts of an economic model.
6. Economic models deal with straight-line relationships between variables.
7. If you look hard enough at the facts, you will inevitably discover the correct theory.
8. Index numbers are invaluable device if we wish to compare two variables measured in different units.
9. Inflation is measured by the price level.
10. Empirical evidence suggests that, on average, high tube fares on the London Underground are associated with lower passenger use.
IX. Tasks for thought:
1. Which of the following data sets would be time series and which would relate to a cross section?
a) Consumers expenditure on durable goods, annually 1980-93.
b) Households expenditure on housing in urban areas in 1994.
c) Monthly price index for potatoes for 1994.
d) Gross national product of the UK for each quarter of 1993.
e) Average weekly earnings for a sample of 350 individuals first interviewed in 1980 and reinterviewed in 1984, 1988, and 1992.
f) Unemployment categorizes by area, 10 June 1993.
2. Table 1 presents information about agricultural employment in six European countries in the two years 1970 and 1990.
a) From observation of the figures, comment on the trend in agricultural employment in these countries. In which countries was the trend most and least strong?
b) For each country, calculate an index for 1990, using 1970 as a base.
| Country | 1970 | 1990 |
| Belgium Denmark Greece France Italy United Kingdom | 177 266 1279 2751 3878 787 | 100 147 900 1335 1895 569 |
X. Fill in the gaps with appropriate prepositions:
1. In March 2009 the change in RPI measured _____(1) a 12-month period turned negative, indicating an overall annual reduction _____(2) prices, for the first time RPI is still______(3) 1960.
2. The RPI is still used by the government as a base _____(4) various purposes, such as the indexation of pensions, amounts payable ____(5) index-linked securities including index-linked gilts, and social housing rent increases.
3. Aggregate variables do not interact _____ (6) one another independent _____ (7) the choices of individuals. And those choices are guided ______ (8) the incentives actors face, and the informational signals they receive.
4. In short, economics is about exchange and the institutions _______ (9) which exchanges take place.
5. To see how far macroeconomics can lead one adrift consider the current debate _____ (10) the minimum wage.
6. The real problem is how ______ (11) government policy a market correction was turned into an economy wide crisis.
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7. If savings rates and RPI continue to diverge, it means the value of any money _____(12) savings accounts which do not protect ______(13) inflation is diminished marginally in real terms.
8. The RPI tracker chart shows the value of 1,000 invested in a typical savings account five years ago based on Standard & Poors UK savings index, compared _____ (14) the rise in inflation (RPI) _____ (15) the same period.
XI. Read the text and choose the correct word or words from A, B, C or D to fill in each gap:
How the Dow?
In 1896, Charles H. Dow developed what is today known as The Dow Jones Industrial Average (DJIA). It was ___1___ of 12 companies that were traded on the New York Stock Exchange. By watching this average of the prices of a dozen large and ___2___ stocks, investors were able to gouge how the entire market was doing. The DJIA and its sister index, The Dow Jones Transportation Average, gave new ___3___ to the stock market.
Dows inventions made investing more understandable and ___4___ for those investors who previously were unsure or untrusting of it.
Though it has changed greatly over the years including ___5___ to 30 companies and using much more ___6___ methods to calculate and deliver its values in real time The Dow___7___ the worlds single most quoted and most watched index. It has truly become the markets measure for investors around the globe.
Nowadays The Dow Jones Global Indexes (DJGI) family is a ___8___ global index series designed to provide a complete range of portfolio-management and ___9___ tools. The indexes are ___10___ to be broad yet investable, targeting 95% market capitalization coverage.
| 1 | A compiled | B composed | C contained | D devised |
| 2 | A distinct | B uncommon | C deduced | D diverse |
| 3 | A credibility | B conformity | C sincerity | D dependence |
| 4 | A liable | B essential | C adjustable | D accessible |
| 5 | A widening | B expanding | C enriching | D comprising |
| 6 | A complicated | B hard | C difficult | D corresponding |
| 7 | A retains | B survives | C remains | D waits |
| 8 | A deliberate | B comprehensive | C simplified | D relevant |
| 9 | A upgrading | B extending | C comprising | D benchmarking |
| 10 | A drawn | B plotted | C designed | D fitted |
