A Formal Set of Statements That Explains Why and How

question 9

Multiple Choice

A formal set of statements that explains why and how certain events are related to one another is called a(n) _.

• A) hypothesis
• B) theory
• C) operational definition
• D) specific prediction

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Definitions:

Tax Cut

A tax cut involves a reduction in the amount of taxes imposed by a government, which can affect consumer spending, investment, and economic growth.

MPC

The marginal propensity to consume (MPC) indicates the proportion of an increase in income that a consumer will spend on consumption rather than saving.

Crowding-out Effect

A situation where increased government spending leads to a reduction in private sector investment due to higher interest rates.

Aggregate Demand

The total amount of goods and services demanded in the economy at a given overall price level and in a given time period.