Psychology(real)

• What is economics classified as?

  Economics is a social science.
• What do social sciences study?

  Social sciences study societies and the human interactions within those societies.
• Why are human interactions considered complex in social sciences?

  Human interactions are influenced by many variables.
• What subjects are included in social sciences?

  • Psychology
  • Politics
  • Geography
  • Business Studies
• Why do economists build models?

  Economists build models to better understand certain interactions within societies.
• What is a model in economics?

  A model is a simplified version of reality.
• What are some examples of economic models?

  Examples of models include the circular flow of income, production possibility curves, and demand and supply.
• What do all economic models make?

  All models make a range of assumptions.
• Why are assumptions necessary in economic models?

  Assumptions are necessary to account for complex human behavior and constantly changing variables.
• What should be considered when evaluating different economic models?

  The underlying assumptions should always be considered.
• What does thinking like an economist involve?

  It involves identifying which variables will be studied and which ones will be excluded.
• What type of relationship between variables should economists consider?

  Economists should consider the type of relationship between variables, whether causal or correlation.
• What does the example of ice cream sales and car thefts illustrate?

  It illustrates that correlation does not imply causation.
• What might happen when two economists analyze the same data?

  They may end up with vastly different interpretations due to the different variables they choose to focus on.
• What is the nature of human interactions in economics?

  Human interactions are complex and continuously changing.
• Why is it hard to examine relationships between two variables in economics?

  It is hard to always come to the same conclusion as can be done in Science or Maths.
• What tools are used in economic analysis?

  A variety of tools are used to help ensure that positive (factual) statements can be made with a degree of reliability.
• What assumptions are made about economic agents in classical economic theory?

  Assumptions are made about the rationality of economic agents involved in transactions.
• What does 'rational' mean in classical economic theory?

  'Rational' means that economic agents can consider the outcome of their choices and recognize the net benefits of each one.
• How do consumers act rationally according to economic theory?

  Consumers act rationally by maximizing their utility.
• How do producers act rationally according to economic theory?

  Producers act rationally by selling goods/services in a way that maximizes their profits.
• How do workers act rationally according to economic theory?

  Workers act rationally by balancing welfare at work with consideration of both pay and benefits.
• How do governments act rationally according to economic theory?

  Governments act rationally by placing the interests of the people they serve first to maximize their welfare.
• What is positive economics concerned with?

  Positive economics is concerned with objective statements of how a market or an economy works.
• What are positive economic statements based on?

  Positive economic statements are based on empirical evidence and tend to be statements of fact.
• Can positive economic statements be proven true or false?

  Yes, positive economic statements can be proven to be true or false.
• What are examples of positive economic statements?

  • The unemployment rate in India has fallen from 8% to 7.3% in the past twelve months.
  • Increasing the minimum wage last year in the UK resulted in improvements.