In economic model there are different types of graphical predictions are done. Moreover, it is said that real-world data is not always there in economic model. Rather than real world these data are predicted to show the common or a general relationship.
The main motto of an economic model is to represent component of economy or field description in a proper way. It is associated with economy that is related to a house hold or a business. It is a stripped down description. An exact reason of using these models is to explore the various policies along with their exact impact. There are different types of graphs used in models of economy. You can say that all different policies and the other effects, which are related to these policies, are used to prepare a model. For example – if you are preparing for a model of airplanes that is associated with wind tunnels, then it would be very important to get the models of climate.
Some models are repeating patterns. When economic models are predicted on graph there will be some curves. On this basis, the types of patterns are predicted. These are as follows –
- Variables moving in opposite directions.
- Variables moving in similar direction.
- Variables that are unrelated
- Variables having a minimum or a maximum.
Link of Previous Main Topic:-
- Definition of Economics
- The Economic Way of Thinking
- A Choice Is a Tradeoff
- Making a Rational Choice
- Benefit What You Gain
- Cost What You Must Give Up
- How Much Choosing At the Margin
- Choices Respond To Incentives
Links of Next Macroeconomics Topics:-
