Theme 1 - The nature of economics

Question 1

Ceteris Paribus

Answer 1

“all other things being equal”

The effect of one economic variable on another. It is assumed that everything else stays the same (all other variables are held constant).

Question 2

Positive (Economic) Statement

Answer 2

Objective statements based on facts and evidence that can be proved or disproved (tested).
-Include what was, is or will be.

Question 3

Normative (Economic) Statement

Answer 3

Subjective statements based on value judgements which can’t be proved or disproved.
-Include “I think”, “I should”, “I believe”.