Making use of an economic model is a process of

Question

Quizplus · Accepted Answer

Making use of an economic model involves running experiments to determine how changes in the exogenous variables will change the endogenous variables. This is because exogenous variables are external factors that affect the economy, while endogenous variables are internal factors that are influenced by the external factors. By manipulating exogenous variables, we can observe how the endogenous variables respond and make predictions about what might happen in the future. Solving hundreds of simultaneous equations (A) may be necessary for some models, but it is not a universal process. Running experiments to determine how changes in the endogenous variables will change the exogenous variables (B) is not possible because endogenous variables are influenced by exogenous variables, not the other way around. Resolving inconsistencies in the actions of economic agents (D) may be a goal of economic models, but it is not the primary process involved in using them.

Making Use of an Economic Model Is a Process of