Which of the following best describes the characteristics of a theory?

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It is a structured explanation of the connections between economic variables.It clarifies causal links between variables and their effects.It forms the foundation for developing economic policies.It accounts for every factor that impacts economic growth.None of the above.

Explanation

Statement I defines a theory as a systematic explanation of the relationships among economic variables. Statements II and III extend beyond the basic definition, while IV is broader than what a theory typically covers. Therefore, only statement I accurately describes a theory.