Which of the following lists the four steps we use to study macroeconomic behavior in the correct order?
A) (1) document the facts; (2) develop a model; (3) compare the predictions of the model to the original facts; and (4) use the model to make other predictions that may eventually be tested
B) (1) document the facts; (2) use the model to make other predictions that may eventually be tested; (3) compare the predictions of the model to the original facts; and (4) develop a model
C) (1) compare the predictions of the model to the original facts; (2) develop a model; (3) document the facts; and (4) use the model to make other predictions that may eventually be tested
D) (1) develop a model; (2) document the facts; (3) compare the predictions of the model to the original facts; and (4) use the model to make other predictions that may eventually be tested
E) None of these answers is correct.

Question

Quizplus · Accepted Answer

The correct sequence for studying macroeconomic behavior starts with documenting the facts to understand the economic phenomena, then developing a model based on these facts. Next, the model's predictions are compared to the original facts to test its validity. Finally, the model is used to make further predictions that can be tested in the future.

Which of the Following Lists the Four Steps We Use