Economic theories are developed to help explain and predict economic behavior. While they may not apply to all economies and may contain unrealistic assumptions, they are still useful tools for analyzing economic phenomena. Moreover, economic theories can be tested using data and empirical methods, allowing economists to refine and improve their models over time.

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Economic Theories

Question 19

Multiple Choice

Economic theories

A) must apply to all economies to be true.
B) can be used to help explain and predict economic behaviour.
C) are not useful because of the unrealistic assumptions they contain.
D) cannot help to predict future behaviour.
E) cannot be tested because we cannot do economic "experiments."

Correct Answer: