An Economic Model is a simplified description of economic reality showing the interrelationships between selected economic variables. There are two broad classes of economic models: theoretical model – to derive verifiable implications about economic behaviour under the assumption, and empirical model – to verify the qualitative predictions of theoretical models and convert these predictions to precise, numerical outcomes. The standard model of supply and demand taught in introductory economics is a good example of a useful economic model.
Related Definitions in the Project: The Economic Reviews; Project Controls; Commercial Definitions
