The purpose of an economic model is to
A) be a complex, exact replica of reality.
B) demonstrate which values and beliefs are best for the economy.
C) make predictions about the real world.
D) manage the economy like an automatic pilot.
E) set the prices in a price system.

Question

Quizplus · Accepted Answer

The primary purpose of an economic model is to make predictions about the real world. While economic models may be simplified representations of reality, they are not intended to be exact replicas nor are they meant to demonstrate which values or beliefs are best for the economy. Economic models do not manage the economy like an automatic pilot nor do they set prices in a price system.

The Purpose of an Economic Model Is to