What are the 5 steps generally used by economists to develop a model?
What will be an ideal response?
1. Decide on the assumptions to be used in developing the model and decide which endogenous variables will be explained by the model and which exogenous variables will be taken as given.
2. Formulate a testable hypothesis.
3.Use economic data to test the hypothesis.
4. Revise the model if it fails to explain the economic data well.
5. Retain the revised model to help answer similar economic questions in the future.
You might also like to view...
Refer to Table 16.1. Use the following statements to answer this question
I. Mexico has an absolute advantage in the production of tomatoes and beer. II. Mexico has a comparative advantage in the production of tomatoes. A) Both I and II are true. B) I is true, and II is false. C) I is false, and II is true. D) Both I and II are false.
When savings ratios in the United States are above 5 percent, the economy grows at a rate of less than 3 percent
Indicate whether the statement is true or false