Which of the following is a characteristic of a good economic forecast?

• A. It ignores changes in market conditions.
• B. It always predicts the exact future outcome.
• C. It relies solely on intuition rather than analysis.
• D. It is based on reliable data and sound economic theory.

Answer: (D)

Verified step by step guidance

1. Understand that a good economic forecast aims to predict future economic conditions as accurately as possible by using systematic methods.
2. Recognize that ignoring changes in market conditions would make a forecast unreliable because markets are dynamic and constantly evolving.
3. Know that no forecast can always predict the exact future outcome due to inherent uncertainties and external shocks in the economy.
4. Realize that relying solely on intuition without analysis lacks the rigor needed for dependable predictions.
5. Conclude that a good economic forecast is based on reliable data and sound economic theory, which provides a structured framework for making informed predictions.