An economic model is useful only if it:
A) contains no positive statements.
B) captures all the complexities of reality.
C) yields accurate predictions.
D) has both macro- and microeconomic applications.

Question

Quizplus · Accepted Answer

The ultimate goal of an economic model is to provide accurate predictions or insights into how the economy functions. While capturing all the complexities of reality and having macro- and microeconomic applications are desirable traits, they are not necessary for a model to be useful. The presence of positive statements, which describe what is true rather than what ought to be true, does not necessarily detract from the usefulness of the model. Therefore, option C is the best answer.

An Economic Model Is Useful Only If It