(1) Economic Methodology And The Economic Problem

Question 1

Economic Methodology:

why do we say economics is a social science

Answer 1

• because we refer to the fact that its concerned with the behaviour of people and groups, and how this affects the way markets and economies work

Question 2

Economic Methodology:

what are economics studies on

Answer 2

• they are on how people make choices, how they interact with each other, and how this shapes outcomes for an economy

Question 3

Economic Methodology:

what is economics all about

Answer 3

it is all about human behaviour, not just numbers or equations

Question 4

Economic Methodology:

How is economics similar to natural sciences

Answer 4

• empirical observation
• data analysis
• modelling

Question 5

Economic Methodology:

how is economics similar to natural sciences : (empirical observation)

Answer 5

• both natural sciences and economics rely on empirical observation to gather data and evidence

Question 6

economic methodology:

how is economics similar to natural sciences : (data analysis)

Answer 6

• both fields involve the analysis of data to identify patterns, relationships, and trends.
• natural scientists use statystical analysis to draw conclusions from experimental data, whilst economists use statistical techniques to analyse economic data (Econometrics)

Question 7

economic methodology:

how is economics similar to natural sciences : (modelling)

Answer 7

• btoh fields use mathematical models to explain complex phenomena. Economists use economic models to analyse and predict economic behaviour

Question 8

economic methodology:

how is economics different to natural sciences

Answer 8

• controlled experiments
• predictability

Question 9

economic methodology:

how is economics different to natural sciences : (controlled experiments)

Answer 9

• natural scientists conduct **controlled experiments **where they can manipulate variables to establish causal relationships
• economists typically rely on observational data due to ethical constraints as controoled experiments are rare

Question 10

economic methodology:

how is economics different to natural sciences : (predictability)

Answer 10

• natural sciences tend to have a higher degree of predictability because natural phenomena follow physical laws
• economics deals with human behaviour, which can be more unpredictable and could be influenced by numerous** social, and cultural factors**

Question 11

economic methodology: (changing methodology)

why are economists increasingly starting to use Randomised controlled trials (RCTs)

Answer 11

• to evaluate the effectiveness of policies and interventions

Question 12

economic methodology: (changing methodology)

what is the function of Randomised controlled trials (RCTs)

Answer 12

• to randomly assign subjects to either a treatment group or a control group, and then compare the outcomes of the two groups

Question 13

economic methodology: (changing methodology)

why are Randomised controlled trials (RCTs) effective

Answer 13

• because the results are not biased by factors such as selection bias or confounding variables

Question 14

economic methodology:

why do economists make assumptions

give an example

Answer 14

• they make assumptions to help simplify the world and help develop theories that explain economic behaviour
• they may assume that consumers are “rational” - meaning they make decisions that maximise their own utility or satisfaction

Question 15

economic methodology:

what did esther duflo do

Answer 15

• her and her colleagues used RCTs to test the impact of different anti-poverty interventions, such as consitional cash transfers and microfinance

Question 16

economic methodology:

what does ceteris paribus mean

Answer 16

• the assumptions means “all other things being equal”

Question 17

economic methodology:

why is ceteris parbius used

Answer 17

• it is used to isolate the effect of a specific variable while keeping other relevant factors constant

Question 18

economic methodology:

what does ceteris parbius allow economists to do

Answer 18

• it allows them to analyse the relationship between variables without the complications of other influencing fators

Question 19

economic methodology:

what is an example of ceteris paribus

- what does it assume
- what does it allow economists to do

Answer 19

• supply and price : when analysing the supply of a product, ceteris paribus is often used to understand the relationship between market price and quantity supplied.
• It assumes that other factors affecting supply (taxes) are held constant.
• this allows economists to examine how changed in price directly impact the quantity producers are willing to supply.

Question 20

economic methodology:

what are positive statements

Answer 20

• they are objective statements that can be tested and evaluated based on empirical evidence. they describe how the world is, without expressing value judgements or opinions

Question 21

economic methodology:

what are positive statements used for

Answer 21

• economic analysis and predicitions

Question 22

economic methodology:

what are normative statements

Answer 22

• they are subjective statements that carry one or more value judgements.

Question 23

economic methodology:

what do normative statements involve

Answer 23

• they involve personal/ moral beliefs and are not testable through empirical analysis alone

Question 24

economic methodology:

what are value judgements

Answer 24

• they are essentially subjective moral beliefs about whats “right” or “wrong”

Question 25

economic methodology:

what can value judgements influence

Answer 25

• they can influence policy decision, such as whether government should raise or lower taxes, or whther it shoud impose new regulations on business