Economic Models Are False And So Government Should Ignore Their Predictions

Better Essays
Question 1. “Economic models are false and so government should ignore their predictions.” Explain, discuss and evaluate the accuracy of this statement. Answer 1: Economic models are the imaginary concept which expresses economic procedure by using variables or quantitative correlations. It is a simply method which uses mathematical and other technical aspects to show complex processes. The statement stated above is false because with the help of the economic models, government can predict about the future economy and make some changes in economic behaviours to achieve highest possible outcome. Economy is an unstable factor and it has to be monitored to understand and predict for the future benefit that is where the economic models are…show more content…
Beyond the PPF line, point ‘E’ is unattainable because resources are limited to get the further outcome. At point ‘D’, the resources are not utilized fully which will creates the situation of unemployment, less economic growth and many other economic impact. Any point inside the PPF line is inefficient as either resources are not used fully or misallocated. Opportunity cost is the choice made to get something by giving up another thing (Nash, n.d., para. 3). Here government have two items to give emphasis computer and television. If government choose to produce computer and wants to make digitalized study system then it has to forgone the television. In the above figure, moving from point B to A, the quantity of television production increased by 2 thousands whereas the quantity of computer production decreased by 3 thousands. The opportunity cost of 2 thousand televisions is 3 thousand computers (Besnek, 2017, slide 3). One of these television cost 1.5 of computers production. Government must have to understand which the most important thing to produce is and how to utilize the available resources efficiently to achieve the maximum benefit for the country. This PPF model shows that, government have to accept and apply the concept of predication in order to properly utilize the resources and get the maximum benefit. Question 2. Using the economics or
Get Access