Which of the following correctly explains a probabilistic model?
A) A probabilistic model gives a description of real world economic phenomena.
B) A probabilistic model shows the possibility of a range of outcomes.
C) A probabilistic model examines the changes in economic variables over a period of time.
D) A probabilistic model is based on value judgments.
E) A probabilistic model is used to explain long-run economic phenomena

Question

Quizplus · Accepted Answer

A probabilistic model shows the possibility of a range of outcomes, taking into account the inherent uncertainty and randomness in the system being modeled. It does not necessarily describe real world economic phenomena, examine changes in economic variables over time, or rely on value judgments. It may be used to explain long-run economic phenomena, but this is not inherent in its definition.

Which of the Following Correctly Explains a Probabilistic Model