An assumption that affects a model in important ways is
A) a key step
B) a simplifying assumption
C) a bad assumption,one that should be avoided in economic theory
D) a critical assumption
E) one that should be replaced with empirical evidence

Question

Quizplus · Accepted Answer

A critical assumption is one that has a significant impact on the model's outcomes and results. It is important to identify and be aware of critical assumptions to correctly interpret and make decisions based on the model's results. Other types of assumptions, such as simplifying assumptions or bad assumptions, may not have as much impact on the model and may be more easily corrected or adjusted.

An Assumption That Affects a Model in Important Ways Is