An economic model is tested by
A)examining the realism of its assumptions.
B)comparing its predictions with the facts.
C)comparing its complexity to other models that deal with similar issues.
D)the Testing Committee of the Canadian Economic Association.
E)comparing its descriptions and examining the realism of its assumptions.

Question

Quizplus · Accepted Answer

The best way to test an economic model is to compare its predictions with the facts or empirical evidence. This helps determine the accuracy and validity of the model. While examining the realism of assumptions and comparing descriptions may also be useful, they do not provide as strong of a test as comparing predictions to facts. Comparing complexity to other models may be helpful for evaluating the usefulness or efficiency of a model, but it does not necessarily test its accuracy. The Testing Committee of the Canadian Economic Association is not a commonly used method for testing economic models.

An Economic Model Is Tested by