ECON 101 Chapter Notes - Chapter 2: Exogeny, Equation, Positive Statement
78
ECON 101 Full Course Notes
Verified Note
78 documents
Document Summary
Normative statements what ought to be, value judgments. Positive statement what actually is, was or will be; matters of fact; disagreements are dealt with evidence: does not need to be true. Distinguishing what is actually true from what we would like to be true requires distinguishing between positive and normative statements. Failure to acknowledge the full state of their ignorance. Different economists have different values, and these normative views play a large part in most discussions of public policy. Economists understand the world through theories and models. Distinguished by their variables, assumptions, and predictions. Variables: well defined item, endogenous variable explained/determined within a theory, dependent variable, exogenous variable independent/manipulated variable. Everyone pursues his or her own self interest when making decisions to maximize their utility: direction of causation. Cause and effect, one causes/affects the other: conditions of application. Specify the conditions under which a theory is meant to hold. Predictions propositions that can be deduced from the theory (aka hypothesis)
