To be useful,an economic model must

Question

Quizplus · Accepted Answer

It is not possible for an economic model to predict accurately all of the time since it is built on assumptions and simplifications that may not always hold true. Similarly, it is not necessary for a model to explain and predict the behaviour of every individual consumer or business. However, a useful economic model should be able to predict the behaviour of the economy or a specific market more accurately than other competing models developed to analyse the same phenomena. This allows policymakers and economists to make better decisions based on the model's predictions. Additionally, while it is important for assumptions in a model to be tested empirically, it is not necessary for them to be verified for the model to be useful.

To Be Useful,an Economic Model Must