Multiple Choice
Which concept describes the idea that government and government officials are not above the law?
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0. Basic Principles of Economics
Positive and Normative Analysis
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Which of the following is the best test of an economic model?
A
Whether it aligns with normative values
B
Whether its assumptions are realistic
C
Whether it is mathematically complex
D
Whether its predictions are consistent with real-world observations
Verified step by step guidance1
Understand that an economic model is a simplified representation of reality designed to explain or predict economic behavior.
Recognize that the primary purpose of an economic model is to generate predictions about economic outcomes or relationships.
Evaluate the options by considering the role of each: normative values relate to what ought to be, assumptions provide the foundation but need not be realistic, and mathematical complexity does not guarantee accuracy.
Focus on the importance of empirical validation: the best test of an economic model is whether its predictions match real-world observations, demonstrating its usefulness and reliability.
Conclude that the key criterion for judging an economic model is the consistency of its predictions with actual data, rather than the realism of assumptions or complexity.
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