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Wednesday, July 24, 2013



INTRODUCTION TO ECONOMICS Presentation Transcript: 

2.Social Science
Meaning-Social Science is a study of people and society and how the interact with each other.

Economics is the study of rationing systems and how scarce resources are allocated to fufill the infinite wants of consumers.

4.Micro economics
Microeconomics is the study of the behavior of markets, workers, households and firms and how they make economic decisions about the allocation of scarce resources.

5.Macro economics
Macroeconomics is the general study of the economy using information such as unemployment, inflation and price levels.

6.Differences b/w macro and micro economics
1. Macro Economics studies economic problems relating to an economy viz., National Income, Total Savings etc.
2. Macro Economics studies the problems of economic growth, employment and income determination etc.
3. Macro Economics does not assume that other things remain constant.
1.Micro Economics studies the problems of individual economic units such as a firm, an industry, a consumer etc.
2. Micro Economic studies the problems of price determination, resource allocation etc.
3. While formulating economic theories, Micro Economics assumes that other things remain constant.
The main determinant of Micro Economics is price.

7.Positive  Science
Positive economics are facts that can be tested and proven.
It is objective knowledge.

It is the branch of economics that concerns the description and explanation of economic phenomena.[1]
It focuses on facts and cause-and-effect behavioral relationships and includes the development and testing of economics theories.
Positive economics usually answers the question "why“
To illustrate, an example of a positive economic statement is as follows:      The price of milk has risen from $3 a gallon to $5 a gallon in the past five years.

8.Normative Science
Normative economics are opinion or beliefs that cannot be proven wrong or right.
 It is called value judgment of economic fairness and this is subjective knowledge.
It states what the economy ought to be like or what goals of public policy ought to be.[1
An example of a normative economic statement is as follows:      The price of milk should be $6 a gallon to give dairy farmers a higher living standard and to save the family farm.

9.Difference b/w positive and normative economics
1.Positive economics deals with what is
2.Positive statements rely on facts and describe the economy the way it is.
3.Positive economics describes the economy as it actually is, avoiding value judgments and attempting to establish scientific statements about economic behavior.
4.Eg-Positive Statement:  The unemployment rate is rising.
1.normative economics deals with what ought to be
2.Normative statements are value judgments.
3.    Normative economics involves value judgments about what the economy should be like and the desirability of the policy options available.
4.Eg-Normative Statement:  The unemployment rate is too high.

10.Economic growth
Economic growth is the real increase (inflation adjusted) of the goods and services produced in an economy. (caused by either increasing production capacity or quality and value of products)

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