An economic model is useful if it
A)includes every detail of reality
B)involves no unproven assumptions
C)is expressed in equations
D)makes accurate predictions
E)is simple enough to be understood by a child

Question

Quizplus · Accepted Answer

The purpose of an economic model is to make predictions about the behavior of the economy. Therefore, the most useful model is one that is able to make accurate predictions. While it would be ideal if a model included every detail of reality and involved no unproven assumptions, this is not always possible in practice. Additionally, a model expressed in equations may be too complex for some to understand, while a model that is simple enough for a child to understand may not be accurate enough to be useful.

An Economic Model Is Useful If It