Question

b) With proper examples draw a distinction between mathematical and econometric models?

Answer 1

An economic model is a set of assumptions that describes the behaviour of an economy.

a set of equations describing the behaviour. These equations are derived from the economic model and have two parts observed variables and disturbances.

Mathematical model

$y=f(X_1,X_2,X_3.......X_4,\beta_1,\beta_2.......\beta_k)+\epsilon$

f is well defined function