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Fisher’s Ideal Formula dose not satisfy _________ test
- a)Unit test
- b)Circular Test
- c)Time Reversal Test
- d)none
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
Fishers Ideal Formula dose not satisfy _________ testa)Unit testb)Circ...
Explanation:
Fisher's Ideal Formula:
- Fisher's Ideal Formula is used to measure the value of money over time by taking into account changes in price levels.
Circular Test:
- The Circular Test is a test of consistency used to check if the formula is internally consistent.
- Fisher's Ideal Formula does not satisfy the Circular Test because it does not account for circular causation.
- Circular causation occurs when changes in the price level affect other variables in the formula, which in turn affect the price level.
Therefore, Fisher's Ideal Formula does not pass the Circular Test as it does not consider circular causation in the calculation of the value of money over time.
Fisher's Ideal Formula:
- Fisher's Ideal Formula is used to measure the value of money over time by taking into account changes in price levels.
Circular Test:
- The Circular Test is a test of consistency used to check if the formula is internally consistent.
- Fisher's Ideal Formula does not satisfy the Circular Test because it does not account for circular causation.
- Circular causation occurs when changes in the price level affect other variables in the formula, which in turn affect the price level.
Therefore, Fisher's Ideal Formula does not pass the Circular Test as it does not consider circular causation in the calculation of the value of money over time.
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Fishers Ideal Formula dose not satisfy _________ testa)Unit testb)Circular Testc)Time Reversal Testd)noneCorrect answer is option 'B'. Can you explain this answer?
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