One reason that economists make assumptions when designing models is to
A) exclude variables that do not add predictive power to the model.
B) make models more like the real world.
C) make models more complex.
D) increase endogenous factors.
E) ensure that all possible factors are included.

Question

Quizplus · Accepted Answer

Economists make assumptions in order to simplify the model and exclude variables that do not add predictive power to the model. This allows economists to focus on the most important factors that affect the relationship between variables in the model.

One Reason That Economists Make Assumptions When Designing Models Is