ECN 104 Chapter Notes - Chapter 2: Normative Economics, Opportunity Cost, Macroeconomics

• School: Ryerson University
• Department: Economics
• Course: ECN 104
• Professor: Tsogbadral Galaabaatar

Document Summary

Economists approach theories in a similar (scientific) method to scientists. They devise theories, collect data, and then analyze these data in an attempt to verify or refute the theories. Scientific method-the dispassionate development and testing of theories about how the world works. The scientific method: observation, theory, and more observation. The interplay between theory and observation occurs in economics (similar to isaac newton s theory of gravity (apple)). When an economist comes up with a theory, they must test this theory with collecting and analyzing data from other countries. Assumptions can simplify the complex world and make it easier to understand. Scientific thinking is deciding which assumption to make. Economists use different assumptions when studying the short-run and long-run effects of a change in the quantity of money. Economist use models composed of diagrams and equations to learn about the world. Economic models omit many details to allow us to see what is truly important.