Question

to be valid, an economic model must:
a. exclude any link to the real world.
b. include every activity which occurs in the real world.
c. be able to predict events occurring in the real world.
d. not be based on an abstraction of the real world.

Explanation:

Economic models are simplified abstractions of real-world economic systems. A valid model does not need to include every real-world activity (that would be too complex) nor exclude all links to reality. Instead, its core purpose is to generate testable predictions about real-world economic events to be considered valid. Options a, b, and d contradict the fundamental nature of economic models.

Answer:

c. be able to predict events occurring in the real world.