To be useful, an economic theory should
A)be based on reasonable assumptions.
B)generate predictions that can be verified with actual data.
C)actually have its predictions corroborated with data.
D)be based on reasonable assumptions, generate predictions that can be verified with actual data, and actually have its predictions corroborated with data.

Question

Quizplus · Accepted Answer

For an economic theory to be useful, it should fulfill all three criteria - reasonable assumptions, verifiable predictions, and prediction verification with actual data. A theory with only reasonable assumptions but unverifiable predictions would not be useful in practice, and a theory with verifiable predictions but based on unreasonable assumptions would not be reliable. Similarly, a theory with both reasonable assumptions and verifiable predictions but unverified predictions would lack credibility. Therefore, the best answer is D.

To Be Useful, an Economic Theory Should