Suppose Two Models Give the Same Predictions --- but One

question 10

True/False

Suppose two models give the same predictions --- but one is simplistic and unrealistic in its assumptions while the other is rich in detail and resembles the real world more closely.If the sole goal of the economist is to predict,then the economist should use the simple and unrealistic model.

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Definitions:

Gain on Acquisition

The positive difference between the value acquired and the purchase price paid in a business combination.

Loss on Acquisition

Financial loss recognized when the cost of acquiring a company exceeds the sum of the fair value of its identifiable net assets at the acquisition date.

Voting Shares

Shares that endow the holder with the right to vote on matters at shareholders' meetings and to elect the directors of the company.

Consolidated Balance Sheet

A financial statement that presents the assets, liabilities, and equity of a parent company and its subsidiaries as if the group was a single entity.