Theories Should Be Judged Based Upon How Consistently and Precisely

question 44

True/False

Theories should be judged based upon how consistently and precisely they predict and how well they explain things.

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Definitions:

Price Stability

An economic condition in which prices remain largely stable, without rapid inflation or deflation.

Maximum Employment

A situation in which all available labor resources are being used in the most economically efficient way, one of the goals of economic policy.

Quantity Theory of Money

This economic theory posits that the general price level of goods and services is directly proportional to the amount of money in circulation.

Velocity of Money

The rate at which money circulates in the economy, typically measured as the ratio of GDP to the money supply.