Economic methodology and the economic problem Flashcards
Why is economics considered a social science?
Economics studies human behavior and how scarce resources are allocated, unlike natural sciences that focus on physical phenomena.
How does economics resemble natural sciences?
Both use models and hypotheses to predict outcomes based on empirical evidence.
How does economics differ from natural sciences?
Economics often deals with complex human behavior, which is less predictable, and outcomes can be influenced by subjective factors like values and politics.
What is a positive statement in economics?
A statement that is objective and testable, describing facts or evidence (e.g., “An increase in taxes reduces disposable income”).
What is a normative statement in economics?
A statement based on opinion or value judgements, which cannot be tested (e.g., “The government should increase taxes on the wealthy”).
How do value judgements affect economic decision-making?
They influence decisions based on personal, ethical, or political beliefs, rather than purely factual analysis.
How do positive consequences of decisions affect people’s views on the best economic option?
People prefer policies that bring desirable outcomes, such as higher income or lower unemployment, even if these outcomes involve trade-offs.
How do moral judgements impact economic policies?
People’s ethical beliefs can lead to support for policies like wealth redistribution, regardless of their economic efficiency.
What role do moral and political judgements play in policy decisions?
They affect views on what outcomes are desirable, influencing policy decisions beyond just economic efficiency (e.g., wealth distribution, environmental sustainability).
How do positive consequences influence people’s views on economic decisions?
People consider the potential outcomes (e.g., growth, inequality) of different policies when forming opinions, weighing the trade-offs between different goals.
