Economic model serves as a theoretical construct representing the processes of multiple variables. Not to mention, the set of logical or quantitative relationships. This is done in an effort to determine what may the possible outcome would be in different circumstances at a later date.
In essence, this is the simplified framework to help describe the workings of the economy.
Everyone Understands Everything
Economic model is basically what economists are using in creating several assumptions.
Furthermore, they are using this in foreseeing how scenarios could play out. As a matter of fact, it is a lot easier to generate a more accurate prediction with a simply-designed economic model in comparison to the more complex ones.
Simplified Data Analysis
More often than not, economists are creating models to be able to simplify their data. Through this, even the uninitiated can have a basic understanding of what they are saying. In the event that a specialist needs to make presentation to a group of people, then making use of economic models would serve an effective way to make everybody grasp the message. If not, the conclusion of the study that was made.
This is one of the reasons why having a well-thought and well-planned economic model is critical in the economy and nation as a whole.