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Q68 (CDS-II/2019) Economy › Basic Concepts & National Income › Economic growth indicators Answer Verified

Which one of the following state- ments with regard to economic models Is not correct ?

Result
Your answer: —  Â·  Correct: C
Explanation

Economic models are simplified representations of reality that highlight essential features of an economic system by omitting minute details [3]. They serve as logical templates to organize thoughts and represent either the whole or a specific part of an economic theory [1]. These models are crucial for gaining insights into cause-and-effect relationships between interacting elements, such as the impact of policy changes or consumer behavior [4]. While many models utilize mathematical equations to describe behavior [1], they are not expressed only through equations. Economic models can also be presented as visual or diagrammatic representations, such as supply-and-demand graphs, or even as verbal arguments in prose [3]. Therefore, the statement that they can be expressed only through equations is incorrect, as visual and qualitative models are widely used in economic analysis and teaching.

Sources

  1. [1] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 2: National Income Accounting > 2.2 CIRCULAR FLOW OF INCOME AND METHODS OF CALCULATING NATIONAL INCOME > p. 16
  2. [3] https://en.wikipedia.org/wiki/Economic_model
  3. [4] https://www.sciencedirect.com/topics/economics-econometrics-and-finance/macroeconomic-model
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