Describe in words the anatomy of an economic model. What will be an i

Describe in words the anatomy of an economic model.

What will be an ideal response?

ANSWER

An economic model is comprised of a set of assumptions that lead to a set of implications. In an effective economic model, if one or more of the assumptions are changed, so too is the set of implications. In other words, any assumption that does not influence the implications is superfluous and can be dropped from the model. In an effective economic model, the implications are clearly stated and testable using real-world data.