Economic models are not used to predict economic phenomena. economic models are simplified representations of the real world. economics phenomena but are never used to predict what might happen next.
An economic model is a simplified description of reality designed to provide testable hypotheses about economic behavior. A key feature of economic models is that they are necessarily subjective in design, as there is no objective measure of economic performance. There are four types of models used in economic analysis: visual models, mathematical models, empirical models, and simulation models.
Economic models are simplifications of reality that allow us to observe, understand and predict economic behavior. The purpose of a model is to reduce complex real-world situations to their essence.
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