Economic Methodology

Question 1

What is Economics?

Answer 1

the study of how to allocate scarce resources in the most efficient way.

Question 2

macroeconomics

Answer 2

the study of an economy or a group of economies.

Question 3

microeconomics

Answer 3

the study of individual markets ( households and firms)

Question 4

Why is economics a social science?

Answer 4

Economics is regarded as a social science because it uses scientific methods to build theories that can help explain the behavior of individuals, groups, and organizations.

Question 5

model

Answer 5

a simplified view of reality use to explain economic problems and issues.

Question 6

positive statement

Answer 6

a statement that is based on facts or actual evidence.

Question 7

normative statement

Answer 7

a statement that is based on the economist’s opinion or value judgement and which cannot be proven.

Question 8

ceteris paribus

Answer 8

a latin phrase meaning ‘other things equal’ or “other things unchanged”; used by economists to model the effects of one change at a time.