A Good Economic Theory

question 107

Multiple Choice

A good economic theory:

• A)includes every detail that affects the economic behavior of interest.
• B)relies on simplifying assumptions in order to explain economic behavior.
• C)does not rely on simplifying assumptions.
• D)is impossible to achieve because of the difficulty of conducting controlled experiments.
• E)is normative and therefore not testable.

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Definitions:

Modified AGI

Modified Adjusted Gross Income (Modified AGI) is a measure used by the IRS to determine eligibility for certain deductions and credits, adjusted from AGI for specific items like IRA contributions and student loan interest.

Married Filing Jointly

A filing status for married couples that allows them to file a single tax return jointly, potentially leading to tax benefits.

Other Income

Earnings or receipts from sources other than a taxpayer's primary occupation, including but not limited to interest, dividends, and rental income.

Form 1040

The official form provided by the Internal Revenue Service (IRS) which is utilized by individuals to submit their yearly income tax returns.