4.1 Theory & practice Flashcards
1
Q
What is a theory?
A
an explanation about how something works in practice.
2
Q
Characteristics of economic theory?
A
- Simplification - makes it easier
- Systematically - step by step
- Organize - place in groups that fit together
3
Q
Main goals of economic theory?
A
- To explain / clarify relationships
-To predict what will happen if something changes. - To serve as a basis of economic policy.
4
Q
Forecast vs Prediction
A
Forecast = real future results
Prediction = What if ? questions
5
Q
Forecast
A
Involves estimating future events
by analyzing past data.
Accurate - can be analyzed for errors.
6
Q
Aim of forecasts
A
To predict trends and expectations
by using historical info
Provides definite & specific statements about future outcomes
7
Q
Prediction
A
Estimating an outcome using intuition and what if questions.
