{"id":3311,"date":"2025-09-24T11:01:49","date_gmt":"2025-09-24T11:01:49","guid":{"rendered":"https:\/\/acmeitsolutions.net\/ibcognito\/?post_type=notes&p=3311"},"modified":"2025-09-24T11:01:51","modified_gmt":"2025-09-24T11:01:51","slug":"unit-1-4-the-method-of-economics","status":"publish","type":"notes","link":"https:\/\/acmeitsolutions.net\/ibcognito\/notes\/unit-1-4-the-method-of-economics\/","title":{"rendered":"Unit 1.4- The Method of Economics"},"content":{"rendered":"\n

Positive vs Normative Economics<\/strong><\/strong><\/h2>\n\n\n\n
<\/div>\n\n\n\n

Positive <\/strong><\/strong><\/h2>\n\n\n\n
    \n
  • Focuses on objective and fact-based analysis. It describes and explains economic phenomena without incorporating value judgments.\u00a0<\/li>\n\n\n\n
  • Example: “The unemployment rate is 6%.”<\/li>\n<\/ul>\n\n\n\n
    <\/div>\n\n\n\n

    Normative <\/strong><\/strong><\/h2>\n\n\n\n
      \n
    • Involves value judgments about what the economy should be like. It deals with opinions on economic policies and outcomes.\u00a0<\/li>\n\n\n\n
    • Example: “The government should reduce unemployment to 4%.”<\/li>\n<\/ul>\n\n\n\n
      <\/div>\n\n\n\n

      Theoretical vs Empirical Economics<\/strong><\/h2>\n\n\n\n
      <\/div>\n\n\n\n

      Theoretical <\/strong><\/strong><\/h2>\n\n\n\n
        \n
      • Involves the creation and use of models and theories to understand and predict economic behaviour. This includes abstract reasoning to explain how economies function.<\/li>\n<\/ul>\n\n\n\n
        <\/div>\n\n\n\n

        Empirical <\/strong><\/strong><\/h2>\n\n\n\n
          \n
        • Uses data, statistics, and econometrics to test theories and analyze real-world economic issues. It involves collecting and interpreting data to support or refute economic hypotheses.<\/li>\n<\/ul>\n\n\n\n
          <\/div>\n\n\n\n

          Ceteris Paribus:<\/strong><\/strong><\/h2>\n\n\n\n
            \n
          • A Latin phrase meaning “all other things being equal.”\u00a0<\/li>\n\n\n\n
          • It is used in economic modelling to isolate the effect of one variable by holding others constant.<\/li>\n\n\n\n
          • Simplification and Assumptions: Economists make assumptions to simplify reality and focus on the most important factors.\u00a0<\/li>\n\n\n\n
          • This helps in creating models that are easier to analyze and understand.<\/li>\n<\/ul>\n\n\n\n
            <\/div>\n\n\n\n

            Diagrams and Graphs:<\/strong><\/strong><\/h2>\n\n\n\n
              \n
            • Visual tools used to represent economic models and theories.\u00a0<\/li>\n\n\n\n
            • They help illustrate relationships between variables and make complex concepts more comprehensible.<\/li>\n<\/ul>\n\n\n\n
              <\/div>\n\n\n\n

              Economic Growth:<\/strong><\/strong><\/h2>\n\n\n\n
                \n
              • An increase in the production of goods and services over time, leading to higher national income and improved living standards.<\/li>\n<\/ul>\n\n\n\n
                <\/div>\n\n\n\n

                Economic Stability:<\/strong><\/strong><\/h2>\n\n\n\n
                  \n
                • Achieving steady growth, low inflation, and low unemployment. It aims to avoid large fluctuations in the economy.<\/li>\n<\/ul>\n\n\n\n
                  <\/div>\n\n\n\n

                  Fiscal Policy:<\/strong><\/strong><\/h2>\n\n\n\n
                    \n
                  • Government policy on taxation and spending to influence economic activity. It includes adjusting tax rates and government spending levels.<\/li>\n<\/ul>\n\n\n\n
                    <\/div>\n\n\n\n

                    Monetary Policy:<\/strong><\/strong><\/h2>\n\n\n\n
                      \n
                    • Central bank policy on controlling the money supply and interest rates. It includes adjusting interest rates and conducting open market operations to influence economic conditions.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"

                      Positive vs Normative Economics Positive Normative Theoretical vs Empirical Economics Theoretical Empirical Ceteris Paribus: Diagrams and Graphs: Economic Growth: Economic Stability: Fiscal Policy: Monetary Policy:<\/p>\n","protected":false},"featured_media":0,"template":"","subject":[87],"unit":[103],"class_list":["post-3311","notes","type-notes","status-publish","hentry","subject-economics","unit-unit-1"],"acf":[],"_links":{"self":[{"href":"https:\/\/acmeitsolutions.net\/ibcognito\/wp-json\/wp\/v2\/notes\/3311","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/acmeitsolutions.net\/ibcognito\/wp-json\/wp\/v2\/notes"}],"about":[{"href":"https:\/\/acmeitsolutions.net\/ibcognito\/wp-json\/wp\/v2\/types\/notes"}],"wp:attachment":[{"href":"https:\/\/acmeitsolutions.net\/ibcognito\/wp-json\/wp\/v2\/media?parent=3311"}],"wp:term":[{"taxonomy":"subject","embeddable":true,"href":"https:\/\/acmeitsolutions.net\/ibcognito\/wp-json\/wp\/v2\/subject?post=3311"},{"taxonomy":"unit","embeddable":true,"href":"https:\/\/acmeitsolutions.net\/ibcognito\/wp-json\/wp\/v2\/unit?post=3311"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}