Economic methodology

Question 1

Define mAcroeconomics

Answer 1

The study of an economy or a group of economies

Question 2

Define mIcroeconomics

Answer 2

The study of individual markets (households and firms)

Question 3

Why is economics a social science?

Answer 3

Science: Define problem to be investigated > Put forward a theory > Investigate the theory > Accept or reject the theory

Social: Looks at human behaviour

Question 4

Define Positive Statements:

Answer 4

Statement that is based on facts or actual evidence

Question 5

Define Normative Statements:

Answer 5

Statement that is based on economist’s opinion or value added judgement and which cannot be proven

Question 6

What is ceteris paribus?

Answer 6

Ceteris paribus is the Latin phrase meaning other things equal or all other things held constant or unchanged.
It is used to help consider the effects of one change at a time

Question 7

Define short run

Answer 7

Time period when a firm can change at least one but not all factors of production eg. labour

Question 8

Define long run

Answer 8

Time period when all factors of production are changed

Question 9

Define very long run

Answer 9

Time period when all key inputs into production are variable, such as technology, government regulation and social concerns