Good economic models

Question

Quizplus · Accepted Answer

Good economic models should be able to yield usable predictions and implications for the real world based on realistic and relevant assumptions, data, and variables. It is not necessary for economic models to represent every detail of the real world, as long as they capture the most essential components of the economic phenomenon they are trying to explain. Similarly, economic models can use multiple factors to analyze a problem, and not just limited to two. Finally, economic models should be testable, and predictions should be able to be validated or falsified based on empirical evidence.

Good Economic Models