Theory Seeks to

question 113

Multiple Choice

Theory seeks to

• A)simplify a complex reality
• B)confront reality in all its complexity by focusing on the unique aspects of each phenomenon
• C)explain phenomena without predicting them
• D)predict phenomena without explaining them
• E)distort reality in order to improve forecasting ability

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Definitions:

Joseph Schumpeter

An economist known for his theories on business cycles and economic development, emphasizing the role of innovation and entrepreneurship.

Theory

A system of ideas intended to explain something, based on general principles independent of the thing to be explained.

Invisible Hand

A metaphor coined by Adam Smith to describe the self-regulating nature of the market, where individuals pursuing their own interests inadvertently benefit society as a whole.

Competitive Market

A market structure characterized by a large number of buyers and sellers where no single party can dictate the market price of goods or services.