Economics Homework Help

DQ1

From the IMF publication readings, “Economic Models: Simulations of Reality” in part 1, define economic model. What makes a model good or useful? Why does a model fail? 

Please respond to the discussion question. Then respond to at least one peer’s post. All posts should be substantial – which means you are providing new information or insights. Substantial does NOT mean a lengthy post – in fact, posts should be concise and meaty for conversational purposes, not like a series of essays. Please include citations and references for information from outside sources, formatted in APA style.

DQ2

Select an economic trend from the Vistage report. What are your thoughts on the effect of this trend on the national economy? Find information from at least one outside source to provide new insights and information about the effect of this trend on the national economy.

R1

KAccording to Ouliaris, the economic model is described as, “ a simplified description of reality, designed to yield hypotheses about economic behavior that can be test– ed. An important feature of an economic model is that it is necessarily subjective in design because there are no objective measures of economic outcomes. Different economists will make different judgments about what is needed to explain their interpretations of reality” (Ouliaris, 2017).

Economic models are tools used to conduct research on but not limited to empirical economic patterns which are generally qualitative and are largely susceptible to variance due to the nature of the process. They are hypothetical constructs that encompass a set of theoretical economic procedures that rely on a set of analytical variables. According to Ouliaris, economic models are described further to, “generally consist of a set of mathematical equations that describe a theory of economic behavior” (Ouliaris, 2017).

Generally, a good economic model will give you factual & supportable implications in relation to the theory it is trying to prove. This is done through testing that includes but is not limited to qualitative measurements such as case-studies and lab-based experiments. Due to this reason, successful economic models are still somewhat subjective and can therefore be formally measured through concise and verifiable results.

There are many different reasons why an economic model would fail, some of those reasons include a lack of predictability and an inaccurate assessment of how an economy works. Economic models are also irreplicable and therefore it is difficult to predict changes in future economic behavior based on patterns and past outcomes. Some of the reasons, according to Ouliaris, have been due to, “Insufficient attention to the links between overall demand, wealth, and—in particular—excessive financial risk taking” (Ouliaris, 2017).

Reference

Ouliaris, S. (2021). Economic Models: Simulations of Reality. Economic Concepts Explained. Retrieved October 26, 2021, from https://www.imf.org/external/pubs/ft/fandd/basics/pdf/Economic-concepts-explained.pdf.