A) Economists empirically test their models
B) The usefulness of an economic model does not depend on how well the model predicts
C) An economic model should capture only the essential relationships that are sufficient to analyse the particular problem being studied
D) Economic models relate to behaviour rather than to individual thought processes
Correct Answer: B
Solution :
[b] An economic model is a simplified description of reality, designed to yield hypotheses about economic behaviour that can be tested. An important feature of an economic model is that it is necessarily subjective in design because there are no objective measures of economic outcomes. Different economists will make different judgements about what is needed to explain their interpretations of reality.
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