Scribd
Upload
21 views2 pages

Methodologies of Economics (LIT205)

The document discusses methodologies used in economics including positive vs normative economics, microeconomics vs macroeconomics, use of the scientific method, assumptions, mathematical tools, ceteris paribus, models and theories, empirical vs theoretical economics, interdisciplinary approaches, policy analysis, ethical considerations, the evolution of economic thought, experimental economics, and limitations/critiques.

Uploaded by

manueljames608
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
21 views2 pages

Methodologies of Economics (LIT205)

The document discusses methodologies used in economics including positive vs normative economics, microeconomics vs macroeconomics, use of the scientific method, assumptions, mathematical tools, ceteris paribus, models and theories, empirical vs theoretical economics, interdisciplinary approaches, policy analysis, ethical considerations, the evolution of economic thought, experimental economics, and limitations/critiques.

Uploaded by

manueljames608
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Methodologies of Economics

1. Definition of Economics: Economics is the social science that studies how societies allocate
their limited resources to satisfy their unlimited wants and needs.
2. Positive vs. Normative Economics:
• Positive economics deals with objective analysis, describing how the economy
functions without making value judgments.
• Normative economics involves subjective judgments and recommendations, often
addressing what ought to be done.
3. Microeconomics vs. Macroeconomics:
• Microeconomics focuses on the behavior of individual economic agents such as
consumers, firms, and markets.
• Macroeconomics examines the economy as a whole, including factors like inflation,
unemployment, and GDP.
4. Scientific Method:
• Economists use the scientific method, involving observation, data collection,
hypothesis testing, and theory development.
5. Assumptions and Simplifications:
• Economists often make simplifying assumptions to model complex real-world
situations. These assumptions help in creating tractable models but can limit their real-world
applicability.
6. Mathematical and Statistical Tools:
• Economists frequently employ mathematical and statistical techniques to analyze data
and develop models. This helps in making quantitative predictions and drawing conclusions.
7. Ceteris Paribus:
• This Latin phrase means “all other things being equal.” Economists often use this
concept to isolate the impact of a single variable while holding other factors constant.
8. Models and Theories:
• Economists build models and theories to explain economic phenomena. These models
can be simple supply and demand curves or complex mathematical equations.
9. Empirical vs. Theoretical Economics:
• Empirical economics relies on real-world data and observations to test hypotheses.
• Theoretical economics involves the development of abstract models and theories.
10. Interdisciplinary Approach:
• Economics often draws from other disciplines like psychology, sociology, and political
science to understand economic behavior and outcomes.
11. Policy Analysis:
• Economists play a crucial role in advising policymakers. They use economic analysis to
evaluate the potential impact of policies on various economic indicators.
12. Ethical Considerations:
• Economic methodology also involves ethical considerations, especially in normative
economics, where economists assess policies based on moral and ethical principles.
13. Evolution of Economic Thought:
• The methodology of economics has evolved over time, from classical economics to
neoclassical economics and beyond, reflecting changes in economic theories and practices.
14. Experimental Economics:
• Some economists conduct experiments to test economic theories and human behavior
in controlled settings, contributing to a deeper understanding of economic methodology.
15. Limitations and Critiques:
• Critics argue that economics can be overly abstract, and models may not always
reflect real-world complexities accurately. There’s ongoing debate about the validity and
relevance of economic methods.

You might also like