Economics 1.2

Question 1

positive economics

Answer 1

deals with areas in the subject that are capable of being falsified, or shown to be correct or not

Question 2

ceteris paribus

Answer 2

latin phrase - “all else equal/other things being equal”

Question 3

refutation

Answer 3

a method used in the natural sciences and social sciences where any proposition must be subjected to an empirical test in order to see if it can be disproven or refuted. if it is disproven or refuted, then the proposition must be rejected

Question 4

normative economics

Answer 4

deals with area of the subject which are open to personal opinion and belief, thus not subject to refutation

Question 5

laissez faire

Answer 5

“let it be” - a market free of any government intervention

it is a belief that if market forces are left unimpeded by the government, the outcome will be the most efficient

Question 6

utility

Answer 6

the measure of happiness/satisfaction derived from consuming a good/service

Question 7

Say’s law

Answer 7

a proposition stating that the supply of goods creates its own demand

Question 8

Keynesian revolution

Answer 8

an economic revolution based on the work of Keys, which challenged the laissez faire approach viewpoint and advocating for an interventionist role of the gov. in managing the level of aggregate demand and thus of economic activity

Question 9

monetarist/new classical model

Answer 9

An economic school of thought arguing that the price mechanism along with well-functioning competitive markets are sufficient to lead the economy to full employment. In this school of thought, government intervention is NOT necessary to manage the level of aggregate demand.

Question 10

Behavioural economics

Answer 10

A subdiscipline of economics that relies on elements of cognitive psychology to better understand decision-making by economic agents. It challenges the assumption of economics that economic agents (consumers or firms) will always make rational choices with the aim of maximizing with respect to some objective.

Question 11

Circular economy

Answer 11

An economic system that looks beyond the linear take-make-dispose model and aims to redefine growth, focusing on society-wide benefits. It is based on 3 principles: (1) design out waste (2) keep products and materials in use (3) regenerate natural systems