Choose the statement that best characterizes an economic theory.A valid theory
A)allows one to deduce a normative statement.
B)appeals to the law of large numbers.
C)generates a hypothesis that can predict future events.
D)extrapolates from the past behaviour of a variable to predict its future course.
E)allows one to prove irrefutably one's hypothesis.

Question

Quizplus · Accepted Answer

An economic theory generates a hypothesis that can predict future events. Theories in economics are developed to provide a framework for understanding economic phenomena and making predictions about future outcomes based on past behaviors and trends. While an economic theory may be supported by empirical evidence, it cannot be proved irrefutably. Additionally, economic theories do not generally involve normative statements or appeal to the law of large numbers.

Choose the Statement That Best Characterizes an Economic Theory