If two alternative economic models are offered,other things equal,we would A) tend to pick the one with the lowest R^2. B) select the model that is the most expensive to estimate. C) pick the model that was the most complex. D) select the model that gave the most accurate forecasts E) all of the above

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Quizplus · Accepted Answer

Accuracy of forecasts is a crucial factor in determining the effectiveness of an economic model, and hence, we would tend to pick the model that offers the most accurate forecasts. Other factors such as cost, complexity, etc. may also be relevant, but they would not carry as much weight as accuracy in the decision-making process.

If Two Alternative Economic Models Are Offered,other Things Equal,we Would