Model (redirected from Physical model)

model

An abstraction of reality, generally referring in investments to a mathematical formula designed to determine security values. Economists also use models to project trends in economic variables such as interest rates, economic activity, and inflation rates.

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Model

Any mathematical formula or other structure that economists use to explain or predict occurrences. Economists test their models with real world facts before they gain wide acceptance, but, even then, there is no guarantee that a model will always be a correct predictor. See also: Model risk.