With respect to how economists study the economy, which of the following statements is most accurate? a. economists study the past, but they do not try to predict the future. b. economists use "rules of thumb" to predict the future. c. economists devise theories, collect data, and analyze the data to test the theories. d. economists use controlled experiments in much the same way that biologists and physicists do.

Rate of return douglas keel, a financial analyst for orange industries, wishes to estimate the rate of return for two similar-risk investments, x and y. douglas's research indicates that the immediate past returns will serve as reasonable estimates of future returns. a year earlier, investment x had a market value of $27 comma 000; and investment y had a market value of $46 comma 000. during the year, investment x generated cash flow of $2 comma 025 and investment y generated cash flow of $ 6 comma 770. the current market values of investments x and y are $28 comma 582 and $46 comma 000, respectively. a. calculate the expected rate of return on investments x and y using the most recent year's data. b. assuming that the two investments are equally risky, which one should douglas recommend? why?