Economic models must:
A) be completely realistic to be useful.
B) include all relationships that exist in the relevant thing to be modeled.
C) completely represent the real world.
D) rely on the ceteris paribus assumption.

Question

Quizplus · Accepted Answer

Economic models often rely on the ceteris paribus assumption, which means holding all other things constant. This allows economists to isolate the impact of a specific variable or relationship on economic outcomes. Complete realism and representation of the real world are not always possible in economic modeling, and it is not always necessary to include all possible relationships.

Economic Models Must