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When Economists Use Models to Make Predictions,faulty Assumptions Can Have

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Essay

When economists use models to make predictions,faulty assumptions can have disastrous consequences.Why is "avoid making assumptions" not the solution to this problem? Use the concepts of endogenous and exogenous factors to explain.


Definitions:

Depression

A psychological condition marked by a continuous state of low mood or disinterest in pursuits, significantly disrupting everyday functioning.

American Paradox

The contradiction observed between the high levels of material wealth and standards of living in the United States and the lower measures of happiness and satisfaction reported by its citizens.

Affluent Lifestyle

A way of living characterized by wealth and the ability to afford a high standard of living, with access to luxurious goods and services.

Subjective Well-Being

An individual's self-assessment of their own happiness and satisfaction with life.

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