An economic hypothesis is tested:
A)by assessing the realism of its assumptions.
B)by comparing the hypothesis's predictions to real-world data.
C)most frequently by using a controlled experiment.
D)by assessing the level of descriptive detail.
E)by none of the above. Economic hypotheses are theoretical and therefore cannot be tested.

Question

Quizplus · Accepted Answer

Economic hypotheses can be tested by comparing their predictions to real-world data. It is important to assess the accuracy of the predictions in order to validate or reject the hypothesis. Testing the realism of its assumptions is also an important step in evaluating the hypothesis, but it alone does not constitute a complete test. Controlled experiments are not always feasible or desirable in economics, as the complexity of the phenomena under study often makes it difficult to isolate and manipulate all relevant factors. Descriptive detail is not as important as the ability of the hypothesis to make accurate and testable predictions.

An Economic Hypothesis Is Tested