How do we know if an economic model is useful?
A) It includes every detail of reality.
B) It involves no unproven assumptions.
C) It is expressed in equations.
D) It makes accurate predictions.

Question

How do we know if an economic model is useful?  
A) It includes every detail of reality. 
B) It involves no unproven assumptions. 
C) It is expressed in equations. 
D) It makes accurate predictions.

Quizplus · Accepted Answer

The usefulness of an economic model is determined by its ability to make accurate predictions about the behavior of the economy. While including as many details as possible and avoiding unproven assumptions are important, it is ultimately the ability to make accurate predictions that determines the usefulness of a model. Equations can be a useful tool for expressing models, but they are not the only or most important factor in determining usefulness.

How Do We Know If an Economic Model Is Useful