Which statement about economic models is TRUE?
A) In practice, it is easy for an economist to isolate economic variables.
B) Economists hold all other variables constant in order to see the impact of one particular variable.
C) To be useful, an economic model must include every detail possible and not be an abstraction.
D) Complex models are always better than simple ones.

Question

Quizplus · Accepted Answer

Holding all other variables constant is a common technique in economic modeling, as it allows economists to isolate the impact of a specific variable on the outcome being studied. It is not easy for economists to isolate economic variables, as the economy is complex and many variables are interrelated. Economic models need to simplify and abstract reality in order to be useful and understandable, so including every detail possible would not be practical. The complexity of a model should be appropriate for the question being studied, and more complex models are not always better than simpler ones.

Which Statement About Economic Models Is TRUE