Economic Model

An economic model is a simplified way of understanding how different parts of an economy interact. It uses assumptions and basic principles to represent real-world behaviors of consumers, businesses, and markets. These models help economists analyze issues like prices, supply and demand, growth, and policies by highlighting key factors and relationships. While they don't capture every detail, they provide useful insights to predict outcomes and inform decision-making. Essentially, an economic model is a tool to make complex economic systems easier to study and understand.