What is a theory ?
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Answer: C. I , II and III only
Explanation
Scientific economic theories require internal logical consistency among assumptions. Empirical testing validates whether theoretical predictions match real-world data. Alignment with observed economic phenomena is essential for credible theory. Economic methodology relies on constructing abstract models to explain human behavior. Hypotheses must be falsifiable to meet scientific research standards. Theories evolve as new empirical evidence challenges existing paradigms.
Economists test monetary theories using historical inflation and interest rate data. Policy decisions rely on established theories to forecast economic outcomes. Flawed assumptions lead to inaccurate theoretical predictions in practice. Restricting the answer to option I ignores empirical testing requirements. Pairing only logical consistency and testing omits alignment with real observations. Option IV incorrectly isolates specific criteria while missing holistic requirements.
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