An economist creates an economic model describing how wages will respond when the government imposes higher taxes on workers.According to positive economics,this model is a good model if the model
A) has sufficiently realistic assumptions about workers and employers.
B) is flexible enough to explain the outcome if wages go up or down.
C) is theoretically correct even if its predictions are wrong.
D) accurately predicts how wages in the aggregate adjust to higher taxes.

Question

Quizplus · Accepted Answer

Positive economics focuses on objective and fact-based analysis, where the success of an economic model is judged by its ability to accurately predict outcomes. In this case, a model that accurately predicts how wages adjust to higher taxes would be considered good under positive economics, regardless of the realism of its assumptions, its flexibility, or its theoretical correctness if its predictions do not align with actual outcomes.

An Economist Creates an Economic Model Describing How Wages Will