Which of the following is true?
A) Economists formulate theory and then sometimes try to verify the theory with real-world observations.
B) Real-world observations are used to formulate economic theory, but this is of little use to policymakers.
C) Once an economic theory is developed, it is rarely tested against real-world observations.
D) When a policymaker has an idea about how to advance economic growth, she will ask an economist to formulate a theory, and then this will be compared to real-world observations.
E) Real-world observations motivate economists to formulate theories about how economic growth evolves, and these theories are then used and reevaluated as new data become available.

Question

Quizplus · Accepted Answer

Economists typically observe real-world economic phenomena and use this information to formulate theories about how the economy works, including theories about how economic growth evolves. These theories are then tested against additional real-world observations, and refined as new data become available. Policymakers may consult with economists to formulate economic policies, but this process typically involves using economic theory to predict the outcomes of different policy choices, rather than starting with a policy idea and then asking economists to formulate a theory.

Which of the Following Is True