The best test of an economic theory is:
A)the rigor of its mathematical formulation.
B)its ability to explain and predict.
C)the accuracy of its assumptions.
D)the level of real-world detail it captures.

Question

The best test of an economic theory is:
A)​the rigor of its mathematical formulation.
B)​its ability to explain and predict.
C)​the accuracy of its assumptions.
D)​the level of real-world detail it captures.

Quizplus · Accepted Answer

The ability of an economic theory to explain and predict real-world economic phenomena is the ultimate test of its usefulness and validity. Rigor and accuracy of assumptions are important, but they are not as important as the ability of the theory to explain and predict real-world outcomes. Similarly, capturing real-world detail is important, but it is not the most important criterion for evaluating the usefulness of an economic theory.

The Best Test of an Economic Theory Is