If a Theory's Predictions Are Incorrect

question 20

Multiple Choice

If a theory's predictions are incorrect,

• A)then economists always reject it.
• B)then the data used was clearly faulty.
• C)then economists will likely reduce their confidence in the theory.
• D)then the model must be too simple.

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Definitions:

Treasury Bill

Short-term government securities issued at a discount from the par value and mature in a year or less, serving as a tool for managing short-term liquidity.

Investment

The allocation of resources, usually money, in the expectation of generating an income or profit in the future.

Present Benefits

The advantages or positive outcomes that are received or enjoyed at the current time, as opposed to benefits that may accrue in the future.

Future Benefits

Expected advantages or gains that will be received in the future as a result of current investments or actions.