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.