The basic purpose of economic models is to:

A) construct simplifying assumptions about the real world.
B) explain reality in all its complexity.
C) collect empirical data to support the facts.
D) construct situations where controlled experiments can be carried out.
E) explain and predict economic events.

Economic Models

Simplified representations of complex economic processes used to predict future economic activity.

Simplifying Assumptions

Rational approximations or conditions made to simplify complex systems or models so that they are easier to analyze or understand.

Economic Events

Incidents or developments that affect the economy, such as financial crises, market movements, or policy changes.