To be valid, an economic model must:
A) include every activity which occurs in the real world.
B) not be based on an abstraction of the real world.
C) be able to predict events occurring in the real world.
D) exclude any link to the real world.

Question

Quizplus · Accepted Answer

A valid economic model should be able to make accurate predictions about real-world events. While it may not include every activity that occurs in the real world and may be based on abstractions, its ability to accurately predict events is what makes it a useful tool for understanding economic phenomena. Excluding any link to the real world would render the model useless.

To Be Valid, an Economic Model Must