“Bad theories are abstract and therefore unrealistic; good theories are fully realistic and fit all the facts.” Evaluate
Please provide the best answer for the statement.
While some abstract theories are bad, that certainly does not have to be true. Most good theories are generalizations or predictions about human economic behavior and will not be true in every situation, and thus will not fit all the facts all of the time. A good theory is based on observable behavior and will generally explain or predict correctly.
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In a production possibilities frontier graph, the cost of producing more units of a good is measured by the
A) dollar value of the additional output. B) area in the arc between the PPF and a straight line drawn between the starting point and the ending point. C) dollar value of the resources used to produce the good. D) amount of the other good or service that must be forgone. E) None of the above answers is correct.
Property and casualty insurance companies hold the largest share of their assets in
A) long-term government bonds. B) short-term government securities and commercial paper. C) tax-exempt municipal bonds and U.S. government securities. D) medium-term corporate bonds.
When financial markets are __________, leverage ______________; when they are _______, leverage ____________.
A. booming; multiplies the gains; crashing; magnifies the losses B. booming; magnifies the losses; crashing; multiplies the gains C. crashing; mitigates the losses; booming; mitigates the gains D. crashing; magnifies the losses; booming; mitigates the gains
If the economy is represented in the graph shown and is currently at point E2, what could be said about the state of the economy?
A. There is higher unemployment than the natural rate.
B. There is lower unemployment than the natural rate.
C. The unemployment rate is just about the natural rate.
D. The unemployment rate is zero.