THE LOGIC OF ECONOMICS

THE LOGIC OF ECONOMICS
Scientific Approach:
– Goal: to make general statements about how the economy works
– Theoretical and empirical research are necessary for forecasting and economic analysis
– Economic theory: a set of ideas about the economy, organized in a logical framework
– Economic model: a simplified description of some aspect of the economy
– Usefulness of economic theory or models depends on reasonableness of assumptions,   possibility of being applied to real problems, empirically testable implications, theoretical results consistent with realworld data