What Is the Best Test of an Economic Theory

question 87

Multiple Choice

What is the best test of an economic theory?

• A)its eloquence
• B)the plausibility of its assumptions
• C)its ability to predict real-world events, patterns, and changes
• D)whether it produces implications that are favored by the researcher

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Definitions:

Per Capita GDP

The average economic output per person, calculated by dividing the Gross Domestic Product (GDP) of a country by its total population.

GPI

Genuine Progress Indicator, an alternative measure to GDP that takes into account the environmental and social costs of economic activity.

Per Capita Real GDP

A measure of a country's economic output that accounts for its number of people, adjusting for inflation to represent the value of goods and services produced per person.

Expenditures Approach

A method for calculating GDP that sums total spending on goods and services within an economy, including consumption, investment, government spending, and net exports.