Important characteristics of macroeconomic models include all of the following except:
A) simplifying assumptions.
B) functional relationships based on controlled experiments.
C) endogenous and exogenous variables.
D) implicit or explicit consistency with microeconomic foundations.

Question

Quizplus · Accepted Answer

Macro models are not typically based on controlled experiments, as it is not possible to conduct controlled experiments on economies due to their complexity and the ethical issues involved in manipulating an entire economy. Instead, models are typically constructed using simplifying assumptions, a mix of endogenous and exogenous variables, and they should aim to be consistent with microeconomic foundations.

Important Characteristics of Macroeconomic Models Include All of the Following