Google
Sunday 
December 4, 2022 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
BANK RESERVES: The "money" that banks use to conduct day-to-day business, including cashing checks, satisfying customers's withdrawals, and clearing checks between accounts at different banks. The "money" in question includes vault cash and Federal Reserve deposits. Specifically, vault cash is the paper money and coins that a bank keeps on the bank premises (both in the vault and in teller drawers), which is used to "cash" checks and otherwise provide the funds that customers withdraw. Federal Reserve deposits are accounts that banks keep with the Federal Reserve System, which are used to process, in a systematic, centralized fashion, the millions of checks written each day by customers of one bank that are deposited by customers of another bank. Using these deposits, the Fed acts as a central clearing house for checks, being able to simultaneously debit the account of one bank and credit the account of another. More on the importance of bank reserves can be found under fractional-reserve banking.

Visit the GLOSS*arama


VERIFICATION:

The hypothesis-testing step of the scientific method in which the hypothesized implication of a theory is compared against real world events and data. This verification can provide support or refutation of the hypothesis. Enough support enables a hypothesis to become a principle. Refutation calls into question the theory implying the hypothesis. In either event, further analysis is indicated.
Hypothesis verification is the heart and soul of the scientific method. Comparing what a theory implies will occur with what actually happens is the only way to understand the laws of nature, to learn how the world works.

Two Possibilities

The hypothesis verification process has two possible outcomes. Either the data support the hypothesis or they refute the hypothesis. Either outcome is informative.

Suppose, for example, that Professor Grumpinkston has a hypothesis that students seated closer to the front his classroom learn more and earn higher grades. He can test this hypothesis by comparing grades with seating position. The test indicates that closer seated students either earn higher grades, or they do not.

  • Data and Hypothesis Agree: Suppose that real world data agree with a hypothesis. That is, the implications of a theory are supported by the facts. For Professor Grumpinkston's hypothesis, students seated near the front earn higher grades. What can be concluded?

    A successful test provides support for the hypothesis, but not absolute proof. For Professor Grumpinkston's particular class, during that particular semester, grades are higher for closer seated students. This, however, is only a single test. One test does not absolutely prove the hypothesis or identify the underlying scientific principle.

    To get reasonable proof, a hypothesis needs to be tested many, many, many times under many, many, many different conditions. But even then, a hypothesis is never 100 percent, absolutely proven. Science can NOT prove any hypothesis absolutely. Professor Grumpkinston needs to test his hypothesis over and over again, semester after semester.

    Each test that supports a hypothesis moves it closer to a verified principle. If the hypothesis is verified enough, it is ultimately incorporated into the theory for a new, expanded theory.


  • Data and Hypothesis Do not Agree: Now suppose that real world data do not agree with a hypothesis? That is, the implications of a theory are not supported by the facts. Suppose students seated closer to the front of Professor Grumpinkston's class do not receive higher grades.

    While a hypothesis can never be absolutely proven to be absolutely true, it can be disproved, it can be rejected as false. Rejecting a hypothesis, however, can be extremely useful and informative. When disproven, a hypothesis is NOT true. It does not match the data. Professor Grumpinkston's hypothesis is wrong. This information is worth knowing. Something other than seating position is causing higher grades.

    If a hypothesis is refuted, then something is wrong. Perhaps the theory generating the hypothesis is wrong. Perhaps one or more of the previously verified principles or unverifiable axioms in the theory are wrong. Perhaps the specific test is bad. Perhaps the data are flawed.

    Whatever the reason for refutation, a "failed" test prompts further inquiry. Professor Grumpinkston needs further study of why students earn different grades.


  • Further Testing Needed: The one inescapable conclusion from the hypothesis-verification process is the need for further testing. Whether a hypothesis is accepted or rejected, the recommendation is to test again. But this conclusion should not be surprising. Science is an ongoing process of discovery.

Controlling Other Factors

A key to testing any hypothesis is to control other factors. To test a hypotheses that A causes B, data are needed about BOTH A and B. To test Professor Grumpinkston's grade hypothesis, data are needed on grades and seating position for each student. But factors other than seating position that might affected grades also need to be considered, and controlled.

Controlling other factors is handled using the ceteris paribus assumption. Ceteris paribus means holding other things unchanged. For example, size of classroom, course topic, time of day, number of students and teaching style, are but a few of the other factors that need to be controlled to test whether or not classroom seating affects student grades. In other words, a test must compare apples with apples, not apples with zucchinis.

<= VAULT CASHVERTICAL EQUITY =>


Recommended Citation:

VERIFICATION, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: December 4, 2022].


Check Out These Related Terms...

     | theory | principle | model | data | empirical |


Or For A Little Background...

     | scientific method | science | hypothesis | abstraction | assumption | cause and effect | ceteris paribus | phenomenon |


And For Further Study...

     | economic thinking | seven economic rules | fallacies | seventh rule of complexity |


Search Again?

Back to the WEB*pedia


APLS

WHITE GULLIBON
[What's This?]

Today, you are likely to spend a great deal of time strolling around a discount warehouse buying club wanting to buy either a flower arrangement for that special day for your mother or a New York Yankees baseball cap. Be on the lookout for gnomes hiding in cypress trees.
Your Complete Scope

This isn't me! What am I?

The wealthy industrialist, Andrew Carnegie, was once removed from a London tram because he lacked the money needed for the fare.
"Only great minds can afford a simple style."

-- Stendhal, writer

JEMS
Journal of Economics and Management Strategy
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2022 AmosWEB*LLC
Send comments or questions to: WebMaster