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1. What is the primary method employed in economic
research?
Answer: The primary method employed in economic
research is econometrics.
Rationale: Econometrics is a rigorous approach that
combines economic theory, mathematics, and statistical
analysis to test hypotheses and make predictions. It allows
economists to examine real-world data and draw
meaningful conclusions.
2. How does econometrics contribute to economic
research?
Answer: Econometrics contributes to economic research by
providing a systematic framework for modeling and
analyzing economic relationships, estimating parameters,
and testing hypotheses using real-world data.
Rationale: Econometrics enables economists to quantify
and investigate the complex interactions between variables,
assess the validity of economic theories, make policy
recommendations, and predict the impact of policy
changes.
3. What are the key components of an econometric model?
Answer: The key components of an econometric model are
the dependent variable, independent variables, functional
form, and error term.
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