Nature of Economics

• Ceteris paribus- to simplify analysis, economists isolate the relationship between two variables ​
• economic assumptions: Milton Friedman explained why economists need to make assumptions to provide useful predictions. He stated that economics would have to rely on “uncontrolled experience rather than on controlled experiment.
• Economic Model is a simplified representation of economic processes and relationships that can be used to explain the behavior of the economy.
• Unintended consequences are the outcomes that are not the ones foreseen and intended by a purposeful action