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Philosophy 103: Introduction to Logic
Test: Symbolic Logic

Topic: Theory Construction in Economics

This test is based on the following notes:
The Language of Symbolic Logic
Conjunction, Negation, and Disjunction
Conditional Statements; Material Implication
How to Construct a Truth Table
Argument Forms and Arguments
Statement Forms and Equivalence
Paradoxes of Material Implication

Introduction:  One widely accepted view of a scientific theory is that it is is a set of systematically related statements when taken together should be testable and serve for explanation and prediction.  More precisely, on this view, a theory is composed of higher-level laws which are only indirectly testable by means of the consequences of lower-level laws derived from them.  Laws and theories, then, differ only in generality, abstractness, or degree of confirmation.


A mini-economic theory is sketched by the following four higher-level laws:

(1) If the liquidity preference remains constant and the quantity of money increases, then the rate of interest falls off and the marginal efficiency of capital terminates.

(2) If the rate of interest falls off and the marginal efficiency of capital terminates, then aggregate investment value increases.

(3) Aggregate investment value increases if and only if savings increase.

(4) If aggregate investment value increases, then either investment opportunities are used up or the marginal efficiency of capital terminates.


The following lower-level laws have been proposed by Prof. I.M.A. Userer:

(1) Savings increase; if and only if either savings increase and the rate of interest falls, or savings increase and the rate of interest does not fall.

(2) If either aggregate investment value increases, or the rate of interest falls and the marginal efficiency of capital terminates; then both investment opportunities are used up and the marginal efficiency of capital terminates.

(3) If the termination of the marginal efficiency of capital is a sufficient condition for investment opportunities not being used up, then the quantity of money not increasing is a necessary condition for the liquidity preference remaining constant.

(4) If the quantity of money increases, then the rate of interest falls.

(5) If the marginal efficiency of capital terminates, the aggregate investment value increases.

(6) If the aggregate investment value increases, then investment opportunities are used up.


The Test on Symbolic Logic is in four parts:

Part I:  Truth Value Analysis
Part II:  Argument Forms
Part III:  Statement Forms
Part IV: Formal Proofs

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