How Useful Is Economic Analysis in Solving Complex Social Problems

question 188

Multiple Choice

How useful is economic analysis in solving complex social problems?

• A) It is reliable in analyzing problems, and can usefully serve as the "final word" on solutions.
• B) It is unreliable for understanding much of anything about social problems, and cannot offer much advice.
• C) It is useful in clarifying options, but the final decision often rests on ethical decisions about which people differ.
• D) It is useful in understanding economic problems but is only useful within that very narrow boundary.
• E) It is not useful because economists agree on so little when they use their analysis.

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Definitions:

Present Value of Growth Opportunities

The value today of an investment's expected growth opportunities, used to analyze potential future value creation.

ROE

Return on Equity is an indicator of a company's financial performance, illustrating the amount of profit generated per dollar of shareholders' investment.

Expected Earnings

The projected profits or income of a company, often used in assessing its stock price.

Earnings Retention Ratio

The portion of a company's profits that is reinvested in the business rather than distributed to shareholders as dividends.