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A Theory Must Have All Five Criteria for Evaluating Theory

question 9

True/False

A theory must have all five criteria for evaluating theory in order to be labeled "good."


Definitions:

APC

Average Propensity to Consume, which measures the fraction of income spent on consumption out of the total income.

Disposable Income

Financial endowment to households for the purpose of spending and saving after mandatory tax deductions.

Consumption

The use of goods and services by households. It represents the end-use of products and is a primary component of aggregate demand in an economy.

Disposable Income

The allocation of funds households have to spend and save, after income tax adjustments.

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