An economic theory:
A)should be as detailed as possible in order to model the complexity of an economy.
B)is an abstraction from reality.
C)is only useful if it rests on realistic assumptions.
D)is unrealistic and therefore of dubious usefulness in explaining what occurs in a complex economy.

Question

An economic theory:
A)​should be as detailed as possible in order to model the complexity of an economy.
B)​is an abstraction from reality.
C)​is only useful if it rests on realistic assumptions.
D)​is unrealistic and therefore of dubious usefulness in explaining what occurs in a complex economy.

Quizplus · Accepted Answer

Economic theory is an abstraction from reality, meaning it simplifies the complexities of the economy to create models and make predictions. While it may not capture every detail of real-world scenarios, it is still useful in providing insights and understanding economic behavior.

An Economic Theory