Methodology And The Economic Problem

Question 1

What are the economic agents?

Answer 1

Consumers, producers and governments

Question 2

What do the economic agents make decisions based on?

Answer 2

Political judgement, short-term outcomes, moral judgements and normative statements

Question 3

Ceteris paribus

Answer 3

“All things being equal”

Question 4

Positive statements

Answer 4

Can be backed up/have evidence

Question 5

Normative statements

Answer 5

Opinions- contain value judgements

Question 6

Value judgements

Answer 6

Cannot be quantified and tested, can be found in normative statements.
Affect economic decision-making .

Question 7

Short-termism

Answer 7

Choices a politician makes may be motivated by short-term gain, may not lead to the best outcome in the long run.
E.G lowering income tax today

Question 8

Scarcity

Answer 8

Means are needs and wants a greater than the amount of available resources.
There is only a finite supply of resources.