BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Answer and Explanation: The above statement is false. A limited representation of reality is a simulation of the economy that enables us to watch, comprehend, and forecast economic behavior. A model aims to simplify a complex, real-world situation to its most basic components.

Detailed explanation-2: -The correct answer is option D) Economic models are not used to forecast. The statement is false because the economic models are used for forecasting.

Detailed explanation-3: -All economic models, no matter how complicated, are subjective approximations of reality designed to explain observed phenomena. It follows that the model’s predictions must be tempered by the randomness of the underlying data it seeks to explain and by the validity of the theories used to derive its equations.

Detailed explanation-4: -Most economic models rest on a number of assumptions that are not entirely realistic. For example, agents are often assumed to have perfect information, and markets are often assumed to clear without friction. Or, the model may omit issues that are important to the question being considered, such as externalities.

Detailed explanation-5: -Publisher Summary. This chapter is concerned with various simple models of economic growth. It examines three models, including the multiplier-accelerator model, two-sector model for investment planning, and an optimizing allocation mode. All three models are set out in a very simple form.