The link between the assumption and the predictions of an economic model is:
A)obtained using the rules of logic.
B)a function of the user's experience with economic theory.
C)a function of the author's beliefs.
D)revised in the light of new empirical evidence.

Question

Quizplus · Accepted Answer

The link between the assumption and the predictions of an economic model is obtained using the rules of logic. An economic model is based on a set of assumptions that the economist believes are relevant to the problem being studied. These assumptions are used to develop predictions about the behavior of economic agents in the model. The predictions are then tested against empirical evidence, and if they are found to be inaccurate, the assumptions may need to be revised. However, the link between the assumptions and the predictions is based on logical reasoning, rather than subjective beliefs or experience.

The Link Between the Assumption and the Predictions of an Economic