CH1 Economics as a social science Flashcards
What is economics generally classified as?
as a social science
What method does economics use as the basis for its investigations?
the scientific method
How does the scientific method work?
-a scientist postulates a theory
-then gathers evidence to either support the theory or refute it
-then accepts, modifies or refutes the theory
what are theories that gain universal acceptance often called?
laws
Is it difficult to use the scientific method in economics and why?
it is much more difficult to use the scientific method in economics (social sciences in general) since it is often not possible to set up experiments to test hypotheses. It is often not possible to establish control groups or conduct experiments in environments which enable one factor to be varied while the other factors are kept constant.
-The economist has to gather data in the ordinary everyday world where many variables are changing over any given time period. It then becomes difficult to decide whether the evidence supports or refutes a particular hypotheses
Why do economists build models and theories?
to explain economic interactions
What is an important way in which economists simplify reality?
by adopting the ‘ceteris paribus’ condition
What does ceteris paribus mean in english?
‘all other things being equal’ or ‘all other things remaining the same’
What is positive economics? and what is it concerned with?
it is the scientific or objective study of the subject. It is concerned with finding out how economies and markets actually work
What are positive statements?
these are statements about economics which can be proven true or false. They can be supported or refuted by evidence
What is normative economics concerned with?
it is concerned with value judgements. It deals with the study of and presentation of policy prescription
What are normative statements?
these are statements which cannot be supported or refuted. Ultimately, they are opinions about how economies and markets should work
