The basic purpose of economic models is to
a. construct simplifying assumptions about the real world
b. explain reality in all its complexity
c. collect empirical data to support the facts
d. construct situations where controlled experiments can be carried out
e. provide explanations for, and predictions of, economic events
Question 2
A good economic theory
a. has realistic assumptions
b. contains as much detail as possible
c. cannot be proven false
d. predicts well
e. can only be presented in mathematical terms
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