Intro into part 4: The Methods of Economics

Question 1

Positive statements

Answer 1

way of thinking that tries to describe, explain and predict economic events.

-Positive statements can be objectively proven to be true/false

Question 2

Normative statements

Answer 2

Way of thinking that deals with how the economy should be or ought to be.

-Normative statements are subjective position that are based on beliefs and value judgements.

Question 3

Positive Economics

Answer 3

• Use of logic in decision making
• Seeks to use empirical evidence to create and test hypothesis.
• Assumes “ ceteris paribus”
• Develops theories

Question 4

Normative Economics

Answer 4

• Cannot refute (falsely) statements.
• Necessary for policy making.
• Grapples with equity (justness), not equality.
• Equity can be shown positively
• Equity is a value statement

Question 5

Equity

Answer 5

Means fairness:

Question 6

Equality

Answer 6

Means being the same:

Question 7

Cambridge economic ib book

Answer 7

pg23 to 31