ECO 105 Chapter Notes - Chapter 1-4: Invisible Hand, Economic Model
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An economic model is
a means of empirically testing an economic theory. | |
a generalization about the workings of an abstract economy. | |
a commonly held economic insight stated as a law or general assumption. | |
a framework that places the generalized insights of a theory in a more specific contextual setting. |
What besides a model do economists need to make policy recommendations?
Economists need to understand the empirical evidence supporting the theory as well as real-world economic institutions to make policy recommendations. | |
Economists also need to know the assumptions on which the model is based to make policy recommendations. | |
Economists need to understand the empirical evidence supporting the theory to make policy recommendations. | |
Economists need to understand the empirical evidence gathered through testing the model. |