If a model fits reality but doesn't generate testable predictions, it is of little value to economists
Indicate whether the statement is true or false
True
If the model doesn't deliver testable predictions it cannot be tested against competing models.
You might also like to view...
During the 1987-88 expansion period interest rates in the United States rose as did the rate of investment in the economy. These facts suggest
A) the simple accelerator effect and the effects of higher interest rates complemented each other to raise output growth. B) the simple accelerator effect and the effects of lower interest rates complemented each other to lower output growth. C) the effects of the accelerator were greater than those of increased interest rates. D) the effects of the accelerator were smaller than those of increased interest rates.
In the above figure, market equilibrium at point E yields the quantity X. The quantity X* is socially optimal amount. The government can achieve the optimal outcome by
A) setting the price at P1. B) establishing a tax of P3 - P1 per unit of the good sold. C) establishing a tax of P3 - P2 per unit of the good sold. D) setting the price at P4.