MGEA01H3 Chapter Notes - Chapter 2: Equation, Exogeny, Weighted Arithmetic Mean

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA01H3
• Professor: Michael H O

Document Summary

Normative advice advice that depends on a value judgement: tells others what they ought to do, cannot be evaluated solely by a recourse to facts, statements usually with should . Positive advice does not rely on judgement: if this is what you want to do, here is a way to do it , statements about matters of fact. Distinguishing what is actually true from what we would like to be true requires distinguishing between positive and normative statements. Theories are constructed to explain things: theories are distinguished by their variables, assumptions, and predictions, side not all theory is an abstraction from reality. Predictions the propositions that can be deduced from a theory aka hypotheses. A theory is tested by confronting its predictions with evidence. Note: empirical observation leads to the construction of theories, theories generate speciic predictions and the predictions are tested by more detailed empirical observation.