Suppose a Particular Theory Predicts That on Monday,Wednesday,and Friday the Stock

question 17

Multiple Choice

Suppose a particular theory predicts that on Monday,Wednesday,and Friday the stock market will rise and that on Tuesday and Thursday the stock market will fall.If an economist tests this theory and finds that over a six-month period the theory predicts accurately,the economist would likely say that the theory

• A)has been proven correct.
• B)is reliable.
• C)is not in conflict with the evidence.
• D)shouldn't be taken seriously.
• E)is not useful because stock markets involve irrational human behaviour.

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Definitions:

Budget Field

A category within a budget, specifying an area of financial activity, such as revenues, expenses, or investments.

Interest Rates

The cost of borrowing money or the return on invested funds, typically expressed as a percentage.

After-Tax Profit

The amount of income left after all taxes have been deducted from the gross income.

Economy

An area of the production, distribution, or trade, and consumption of goods and services by different agents in a given geographical location.