1.4: Economics as Social Science and Policy Tool Flashcards
What is a positive statement
About what is. It says what is currently believed about the way the world operates.
How do you test a positive statement?
A positive statement might be right or wrong, but we can test it by checking it against the facts.
What’s a normative statement?
What should be.
How do you test a normative statement?
It depends on values and cannot be tested.
Policy goals are normative statements. It doesn’t assert a fact that can be checked.
Are economists interested in positive or normative statments?
Economists are particularly interested in positive statements about cause and effect.
What is an economic model?
a description of some aspect of the economic world that includes only those features that are needed for the purpose at hand.
How is an economic model tested?
A model is tested by comparing its predictions with the facts.
All the policy questions on which economists provide advice involve a blend of the positive and the normative.
What advice do they provide?
Economics can’t help with the normative part—the policy goal.
But economics can help to clarify the goal.
And for a given goal, economics provides the tools for evaluating alternative solutions—comparing marginal benefits and marginal costs and finding the solution that makes the best use of the available resources.
