Economic Methodology

Question 1

Ceteris Paribus

Answer 1

other things being held equal / constant, so nothing else changes.

Question 2

Models are devised …

Answer 2

with assumptions made and are built with real life scenarios.

Question 3

Positive statements

Answer 3

objective, can be tested with factual evidence + be rejected / accepted.
[will, is]

Question 4

Normative statements

Answer 4

subjective, based on value judgements. [should, suggesting 1 action is more credible]

Question 5

Value judgements

Answer 5

Can influence economic decision making + policy.
Different economists made different judgements from same statistic.

Question 6

People’s views

Answer 6

views concerning best option influenced by positive consequences of different decisions, moral, + political judgements.

Question 7

Why is economics a social science?

Answer 7

We observe human behaviour

Question 8

How do economics make predictions?

Answer 8

Observe behaviour, make hypotheses, make predictions, and use real world evidence to test predictions

Question 9

We are a … science

Answer 9

Positive. We can test it using evidence.

Divot like normative statements as we can’t test it, just an opinion.