Economic theory:
A)can determine which public policy is the most desirable.
B)tries to account for all possible influences.
C)is a tool for understanding economic relationships.
D)uses no assumptions in deriving results.

Question

Quizplus · Accepted Answer

Economic theory is primarily a tool for understanding the relationships between different economic variables and factors. It is based on various assumptions and simplifications, but still can offer valuable insights into economic phenomena. While it may have implications for public policy, it cannot determine the most desirable policy in isolation - this also requires normative value judgments and consideration of political, social, and ethical factors. Economic theory also does not aim to account for all possible influences, as this would be practically impossible and unnecessary for many questions.

Economic Theory