Question

A good economic model has which of these attributes? (Select all that apply.) It is useful: We can use it to find ways to improve how the economy works. □ It improves communication: It helps us to understand what we agree (and disagree) about. It predicts accurately: Its predictions are consistent with evidence. It is a scientific theory: It is a guess about the future. It is clear: It helps us better understand something important.

Answer 1

A good economic model has following attributes:

It is useful: Unless it is useful, there is no use of any model.

It improves communication: Example: AD-AS Models by Monetarists and Keynes explain whether we need government intervention or not.

It predicts accurately: It is not necessary that it predicts accurately every time. example: Philips curve breaks down when aggregate supply decreases. Hence even when economic model has predictive powers, models can be made.

It is scientific theory: It is a forecast about the future but through certain techniques and not a guess.

It is clear: It helps us to understand something important:

Hence, option 1 ,2 and 5 are closest attributes of good economic model.