ECON 1B03 Chapter 2: Micro Chapter 2 Notes.docx

• School: McMaster University
• Department: Economics
• Course: ECON 1B03
• Professor: Hannah Holmes

Document Summary

This chapter discusses the field"s of methodology. Economists devise theories, collect data and then analyze these data in attempt to verify or refute their theories. The scientific method: observation, theory, and more observation. Theory and observation occurs in the field of economics: ex. If a country is experiencing inflation, economist may hypothesis that the government is printing too much money. Undergoing data collection and analysis on prices and money from different countries they use that resource to try to prove their theory. If the data collected disproves their theory, then the economist may start to doubt the logic of his theory. Economists make assumptions, just like all the scientist out there: assumptions can simplify the complex world and make it easier to understand. Economists use different assumptions when studying the short-run and long-run effects of a change in the quantity of money. Economist use diagrams and equation as models to learn about the world and the economy.