To be valid, an economic model must:
a. include every activity which occurs in the real world.
b. include at least 85 percent of the activity which occurs in the real world.
c. be able to predict events occurring in the real world.
d. exclude any link to the real world.
e. not be based on an abstraction of the real world.
Question 2
To abstract from reality in an economic model means that:
a. we include only a few of the essential aspects of reality.
b. the economic study surveys only a very limited period of time.
c. we include only those elements which support our hypothesis.
d. the model includes every aspect of the real world.
e. the model examines the actions of the consumers in the absence of producers and the government.
