The word economics comes from the Greek oikos, meaning household, and

nomos, meaning rule, or governance.

Economics can be described as the social science that examines how people use
limited resources to produce, distribute, and consume goods and services to satisfy
their unlimited needs and desires.
Social science is a major category of academic disciplines, concerned with
society and the
relationships among individuals within a society. It in turn
has many branches, each of which is considered a "social science".
As a social science, it studies how a society's resources are shared, economics
(a) describes and analyzes choices about the way goods and services are
produced, distributed, and consumed, and (b) assesses the consequences of
those choices.
Economics The dismal science, according to Thomas Carlyle, a 19th-century
Scottish writer. It has been described in many ways, few of them flattering. The
most concise, non-abusive, definition is the study of how society uses its scarce
resources.
Resources include the time and talent people have available, the land, buildings,
equipment, and other tools on hand, and the knowledge of how to combine them to
create useful products and services.
Often, people appear to use their resources to improve their well-being. Well-being
includes the satisfaction people gain from the products and services they choose to
consume, from their time spent in leisure and with family and community as well as
in jobs, and the security and services provided by effective governments.
Sometimes, however, people appear to use their resources in ways that don't
improve their well-being.
In short, economics includes the study of labor, land, and investments, of money,
income, and production, and of taxes and government expenditures. Economists
seek to measure well-being, to learn how well-being may increase over time, and to
evaluate the well-being of the rich and the poor. The most famous book in
economics is the Inquiry into the Nature and Causes of The Wealth of Nations
written by Adam Smith (father of economics) , and published in 1776 in Scotland.
What is the importance of economics?
The fundamental problem of economic is said to be scarcity - the idea that
wants (demand) is greater than the resources we have. These are the questions all
nations must ask when dealing with scarcity and efficiently allocating their
resources. Frequently we face choices on:
What to produce
How to produce
For whom to Produce

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Economics helps to decide on questions like this. More specifically economics is

important in these areas.

Scarcity, refers to the tension between our limited resources and our unlimited
wants and needs. For an individual, resources include time, money and skill. For a
country, limited resources include natural resources, capital, labor force and
technology.
Because all of our resources are limited in comparison to all of our wants and needs,
individuals and nations have to make decisions regarding what goods and services
they can buy and which ones they must forgo. For example, if you choose to buy
one DVD as opposed to two video tapes, you must give up owning a second movie
of inferior technology in exchange for the higher quality of the one DVD. Of course,
each individual and nation will have different values, but by having different levels
of (scarce) resources, people and nations each form some of these values as a
result of the particular scarcities with which they are faced.
So, because of scarcity, people and economies must make decisions over how to
allocate their resources. Economics, in turn, aims to study why we make these
decisions and how we allocate our resources most efficiently.

Factors of production
The factors of production are resources that are the building blocks of the economy;
they are what people use to produce goods and services. Economists divide the
factors of production into four categories: land, labor, capital, and entrepreneurship.
The first factor of production is land, but this includes any natural resource used to
produce goods and services. This includes not just land, but anything that comes
from the land. Some common land or natural resources are water, oil, copper,
natural gas, coal, and forests. Land resources are the raw materials in the
production process. These resources can be renewable, such as forests, or
nonrenewable such as oil or natural gas. The income that resource owners earn in
return for land resources is called rent.
The second factor of production is labor. Labor is the effort that people contribute
to the production of goods and services. Labor resources include the work done by
the waiter who brings your food at a local restaurant as well as the engineer who
designed the bus that transports you to school. It includes an artist's creation of a
painting as well as the work of the pilot flying the airplane overhead. If you have
ever been paid for a job, you have contributed labor resources to the production of
goods or services. The income earned by labor resources is called wages and is the
largest source of income for most people.
The third factor of production is capital. Think of capital as the machinery, tools
and buildings humans use to produce goods and services. Some common examples
of capital include hammers, forklifts, conveyer belts, computers, and delivery vans.
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Capital differs based on the worker and the type of work being done. For example, a
doctor may use a stethoscope and an examination room to provide medical
services. Your teacher may use textbooks, desks, and a whiteboard to produce
education services. The income earned by owners of capital resources is interest.

The fourth factor of production is entrepreneurship. An entrepreneur is a person

who combines the other factors of production - land, labor, and capital - to earn a
profit. The most successful entrepreneurs are innovators who find new ways
produce goods and services or who develop new goods and services to bring to
market. Without the entrepreneur combining land, labor, and capital in new ways,
many of the innovations we see around us would not exist. Think of the
entrepreneurship of Henry Ford or Bill Gates. Entrepreneurs are a vital engine of
economic growth helping to build some of the largest firms in the world as well as
some of the small businesses in your neighborhood. Entrepreneurs thrive in
economies where they have the freedom to start businesses and buy resources
freely. The payment to entrepreneurship is profit.

Microeconomics The study of the individual pieces that together make an

economy. It concentrates on the behavior and performance of individual units, i.e.
consumers, family, industry, firms where demand plays a key role in determining
the quantity and the price of a product in the economy along with the price and
quantity of related goods (complementary goods) and substitute products so as to
make decisions regarding the best allocation of scarce resources concerning their
alternative uses.
Microeconomics considers issues such as how households reach decisions about
consumption and saving, how firms set a price for their output, whether
privatization improves efficiency, whether a particular market has enough
competition in it and how the market for labor works.
Although the behavior of individuals is important, economics also addresses the
collective behavior of businesses and industries, governments and countries, and
the globe as a whole. Microeconomics starts by thinking about how individuals make
decisions. Macroeconomics considers aggregate outcomes. The two points of view
are essential in understanding most economic phenomena.
Macroeconomics The big picture: analyzing economy-wide phenomena such as
growth, inflation and unemployment.
Macroeconomics is the branch of economics that concentrates on the behavior and
performance of aggregate variables and mainly focuses on the issues which affects
the whole economy. It includes regional, national and international economies and
covers the major areas of the economy like unemployment, poverty, stabilizing the
general price level, GDP (Gross Domestic Product), imports and exports, economic
growth, globalization, monetary/ fiscal policy etc. It helps in resolving the various
problems of the economy so that it will function efficiently.
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Although economists generally separate themselves into distinct macro and micro
camps, macroeconomic phenomena are the product of all the microeconomic
activity in an economy. The precise relationship between macro and micro is not
particularly well understood, which has often made
it difficult for a government to deliver well-run macroeconomic policy.

BASIS FOR
COMPARISON

Meaning

Scope

MICROECONOMICS

MACROECONOMICS

The branch of economics that

The branch of economics that

studies behaviour of

studies the behaviour of the

individual consumer, firm,

whole economy, i.e. national or

family is known as

international economy is known

Microeconomics.

as Macroeconomics.

Covers various issues like

Covers various issues like,

demand, supply, product

national income, general price

pricing, factor pricing,

level, distribution, employment,

production, consumption,

money etc.

economic welfare, etc.

Importance

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Helpful in determining the

Maintains stability in the general

prices of a product along with

price level and resolve the major

the prices of factors of

problems of the economy like

production (land, labour,

inflation, deflation, reflation,

BASIS FOR
COMPARISON

Limitations

MICROECONOMICS

MACROECONOMICS

capital, entrepreneur etc.)

unemployment and poverty as a

within the economy.

whole.

It is based on unrealistic

It has been analysed that 'Fallacy

assumptions, i.e. In

of Composition' involves which

microeconomics it is

sometimes doesn't proves true

assumed that there is full

because it is possible that what

employment in a society

is true for aggregate may not be

which is not at all possible.

true for individuals too.

Key Differences between Micro and Macro Economics

Microeconomics studies the particular market segment of an economy, whereas
Macroeconomics studies the whole economy, which ultimately covers various
market segments.
Microeconomics deals with individual product, firm, household, industry, wages,
prices, etc. while Macroeconomics deals with aggregates like national income,
national output, price level etc.
Microeconomics covers issues like how the price of a particular commodity will
affect its quantity demanded and quantity supplied and vice versa, while
Macroeconomics covers major issues of an economy like unemployment, monetary/
fiscal policies, poverty, international trade etc.
Microeconomics determine the price of a particular commodity along with the prices
of complementary goods and the prices of substitutes whereas the Macroeconomics
is helpful in maintaining the general price level.
While analyzing any economy microeconomics takes a bottom-up approach, but
macroeconomics takes top-down approach into consideration.
Micro Economics
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Pros: It helps in the determination of prices of a particular product and also the
prices of various factors of production, i.e. land, labor, capital, organization and
entrepreneur.It is based on a free enterprise economy, which means the enterprise
is independent to take decisions.
Cons: The assumption of full employment is completely unrealistic. It only analyses
a small part of an economy while a big part is left.
Macro Economics
Pros: It is helpful in determining the balance of payments along with the causes of
deficit and surplus of it. It makes decision regarding economic and fiscal policies
and solves the issues of public finance.
Cons: Its analysis says that the aggregates are homogeneous but it is not so
because sometimes they are heterogeneous. It covers only aggregate variables
which avoids the welfare of the individual.
Similarities
As micro economics focuses on the allocation of limited resources among individual
while the macro economics examines that how the distribution of limited resources
is to be done among many people so that it will make the best possible use of
scarce resources. As micro economics studies about individual units at the same
time macro economics studies about the aggregate variables. In this way we can
say that they are interdependent on each other.
Conclusion
Micro and Macro Economics are not contradictory in nature, but they are
complementary. As every coin has two aspects- micro and macro economics are
also the two aspects of the same coin where ones demerit is others merit and in
this way they covers the whole economy, the only important thing which makes
them different is the area of their application.

How do Micro and Macro Economics interact?

Microeconomics and macroeconomics are inter-related because their fields of
interest are bound together and cannot be separated. The decisions of individuals
make up the economies studied in macroeconomics, even as broader trends in
those economies strongly influence the decisions of those individuals. A
microeconomist cannot possibly study the investment policies of businesses without
understanding the impact of macroeconomic trends such as economic growth and
taxation policies. Similarly, a macroeconomist cannot study the components of
output in a nations economy without understanding the demand of individual
households and firms.
In the end, both microeconomics and macroeconomics are examining the same
things, albeit from very different perspectives. Microeconomics takes a bottoms-up
approach while macroeconomics takes a top-down approach.
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Comparative economic systems is a field of study in economics that focuses on

analyzing economic systems by comparing them to other types of economies.
These comparisons may be used to examine the economic systems of real
countries, or may be used to compare the principles of different economic theories.
Analyzing economics through comparison is believed to be useful because no
system is inherently perfect; by examining what benefits each theory or economy
presents, economists can help craft and refine new theories to help improve future
economic practice and thought
The institutional framework of formal and informal rules that a society uses to
determine what to produce, how to produce and how to distribute goods and
services
Each nation and society thus must make choices and decision based upon their own
values. If a society values meeting more wants and needs at the expense of
freedom of choice then they may choose a system radically different then our own.
Thus we have seen the creation of a variety of economic systems.
Economic systems are divided up into three basic types. These types are:
Traditional Economic Systems
Market Economic Systems
Command Economic Systems
Traditional Economic System
A traditional economic system is one in which people's economic roles are the
same as those of their parents and grandparents. Societies that produce goods
and services in traditional ways are found today in some parts of South America,
Asia, and Africa. There, people living in an agricultural village still plant and
harvest their own food on their own land. And the ways they produce clothing
and shelter are almost exactly the same as those used in the past. Tradition
decides what these people do for a living and how their work is performed.

Market Economic System

A market economic system is one in which a nation's economic decisions are the
result of individual decisions by buyers and sellers in the marketplace. The U.S.
has a market economic system. When you finish school, you may go to work
where you choose, if a job is open. You are also free to go into business on your
own. Suppose that you decide to open a business. You will risk the money that
you have saved or borrowed in the hope that you will be successful. The price
that you charge for your goods or services will be influenced by the prices
charged by your competitors (other businesses selling the same items). The
success that you have will depend on the demand by consumers for your goods.
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You may do extremely well. But if people do not want what you are selling, you
will go out of business.

Command Economic System

In a command economic system, the main decision maker is the government. No
person may independently decide to open and run any kind of business. The
government decides what goods and services are to be produced. And the
government sells these goods and services. The government also decides how
the talents and skills of its workers are to be used.

WHO OWNS THE MEANS OF PRODUCTION IN ECONOMIC SYSTEMS?

We have classified economic systems according to the way they answer three basic
questions of what, how, and who. A fourth question that should be asked is, "Who
owns the means of production?" An economy's means of production are its capital:
factories, farms, shops, mines, and machinery. The means of production are used to
produce other goods and services.
If the government owns and operates almost all of the nation's means of production,
then that nation's economic system is called communism. China has a communist
economic system. Almost all of the means of production are publicly owned-that is,
owned by the government. Government planners decide the answers to the basic
economic questions. Farming on private plots of land is sometimes allowed. In
recent years, the Chinese government has been allowing more and more private
businesses to operate.
If the government owns and operates many of the nation's major industries-such as
banks, airlines, railroads, and power plants-but allows individuals to own other
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businesses, including stores, farms, and factories, that nation's economic system is
called socialism.
If almost all the stores, factories, and farms in a nation are owned and operated by
private individuals or businesses, then its system is called free enterprise, or
capitalism. The U.S. has a free enterprise, or capitalist, economic system.
No country has an economic system that is 100 percent communism,
socialism, or capitalism. All countries today have mixed economic systems or
mixed economies, with some free enterprise and some government ownership.

Econometrics - Mathematics and sophisticated computing applied to economics.

Econometricians crunch data in search of economic relationships that have
statistical significance. Sometimes this is done to test a theory; at other times the
computers churn the numbers until they come up with an interesting result.
It can be subdivided into two major categories: theoretical and applied.
Econometrics uses tools such as frequency distributions, probability and probability
distributions, statistical inference, simple and multiple regression analysis,
simultaneous equations models and time series methods. An example of a real-life
application of econometrics would be to study the hypothesis that as a person's
income increases, spending increases. *investopedia

Economic development Economic development can be defined as "a sustained

community effort to improve both the local economy and the quality of life by
building the area's capacity to adapt to economic change" (Loveridge and Morse)
Economic development involves an ongoing and supported program to help and
make better a general level of health, economy, security, and business in a
community or region.
Part of the goal of economic development is to create a new system that allows
local communities and regions to develop new ways of earning and production that
can be sold outside of the area. By being able to create new resources and product
in demand in a wider network, more financial resources from sales can then come
back to the community, improving the area with new cash spent locally by wage
earners and businesses. Wages then rise, capital spending increases, and the
community can invest more in its infrastructure for societal benefits. Common
results tend to be improved schools, improved transportation networks such as train
tracks and roads, and improve sanitation systems such as water delivery and sewer
system. Capital expense creates opportunity for second-level entities and
businesses as well. As initial projects and large ventures occur, support is needed
from hundreds of smaller organizations, offices, entities, and skilled staff. These
second level entities then begin to thrive from new opportunity, usually far more
promising than anything seen before in the area.
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Economic Development vs. economic growth

Economic Growth is defined as the rise in the money value of goods and services
produced by all the sectors of the economy per head during a particular period
of time. It is a quantitative measure that shows the increase in the number of
commercial transactions in an economy.
Economic growth can be expressed in terms of gross domestic product (GDP)
and gross national product (GNP), that helps in measuring the size of the
economy. It lets us compare in absolute and percentage change, i.e. how much
an economy has progressed since last year. It is an outcome of the increase in
the quality and quantity of resources and advancement of technology.
Economic Development is defined as the process of increase volume of
production along with the improvement in technology, rise in the level of living,
institutional changes, etc. In short, it is the progress in the socioeconomic
structure of the economy.
Human Development Index (HDI) is the appropriate tool to gauge the
development in the economy. Based on the development, the HDI statistics rank
countries. It considers the overall development in an economy regarding the
standard of living, GDP, living conditions, technological advancement,
improvement in self esteem needs, creation of opportunities, per capita income,
infrastructural and industrial development and much more.

Key Differences Between Economic Growth and Economic

Development
The basic differences between economic growth and development are
explained in the points given below:
1.Economic growth is the positive change in the real output of the country in
a particular span of time economy. Economic Development involves rise in
the level of production in an economy along with the advancement of
technology, improvement in living standards and so on.
2.Economic growth is one of the feature of economic development.
3.Economic growth is an automatic process. Unlike economic development,
which is the outcome of planned and result oriented activities.
4.Economic growth enables an increase in the indicators like GDP, per capita
income, etc. On the other hand, economic development enables
improvement in the life expectancy rate, infant mortality rate, literacy rate
and poverty rates.

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5.Economic growth can be measured when there is a positive change in the

national income, whereas economic development can be seen when there is
an increase in real national income.
6.Economic growth is a short term process which takes into account yearly
growth of the economy. But if we talk about economic development it is a
long term process.
7.Economic Growth is applicable to developed economies to gauge to the
quality of life, but as it is an essential condition for the development, it
applies to developing countries also. In contrast to, economic development is
applicable to developing countries to measure progress.
8.Economic Growth results in quantitative changes, but economic
development brings both quantitative and qualitative changes.
9.Economic growth can be measured in a particular period of time. As
opposed to economic development is a continuous process, so it can be seen
in the long run.
To understand the two terms economic growth and economic development, we will
take an example of a human being. The term growth of human beings simply means
the increase in their height and weight which is purely physical. But if you talk about
human development, it will take into account both the physical and abstract aspects
like maturity level, attitudes, habits, behavior, feelings, intelligence and so on.
In the like manner, growth of an economy can be measured through the increase in
its size in the current year in comparison to previous years, but economic
development includes not only physical, but also non-physical aspects that can only
be experienced like improvement in the lifestyle of the inhabitants, increase in
individual income, improvement in technology and infrastructure, etc.
Conclusion
After the above discussion, we can say that economic development is a much
bigger concept than economic growth. In other words, economic development
includes economic growth. As the former uses various indicators to judge the
progress in an economy as a whole, the latter uses only specific indicators like gross
domestic product, individual income etc.

Economic history changes in economic well-being and how economic institutions

have developed.
Economics of race and gender

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What is gender? The term "gender" refers to the socially-constructed differences

between men and women, as distinct from "sex", which refers to their biological
differences.
In all societies, men and women play different roles, have different needs, and face
different constraints. Gender roles differ from the biological roles of men and
women, although they may overlap. For example, women's biological roles in child
bearing may extend their gender roles to child rearing, food preparation, and
household maintenance.

Gender roles demarcate responsibilities between men and women in

social and economic activities
access to resources
decision-making authority
These roles can and do shift with social, economic, and technological change. For
example, factors such as the introduction of new crops and technologies, mounting
pressure on land, or increasing poverty or migration can change the roles of men
and women in agriculture.
In agriculture, women are actively involved in production in most countries.
However, men's and women's roles differ widely across regions. Among some
groups, for example, women are responsible for milking; in others, men do this
work.
What factors influence gender-based differences? Social and economic factors can
reinforce or decrease gender-based disparities. These factors include:
Institutional arrangements: These create and reinforce gender-based constraints
or, conversely, foster an environment in which gender disparities can be reduced.
For example, where women primarily grow food crops, institutions providing
agricultural credit for food crop production can either promote or discourage
women's access to credit.
The formal legal system: This reinforces customary practices and gives women
inferior legal status in many countries. Women are discouraged--and in some
countries legally barred--from owning land, property, and other agricultural assets;
opening bank accounts; or contracting for credit in their own names.
Sociocultural attitudes and ethnic and class/caste-based obligations: These
affect farming systems and determine which crops men and women grow, who
drives tractors or gives livestock vaccinations, or whether women need their
husbands' approval to sell their cattle or the products of their labor.
Religious beliefs and practices: These limit women's mobility, social contact,
access to resources, and the types of activities they can pursue. Some
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interpretations of religious law, for example, often stipulate gender-based

differences in inheriting land.
How can gender-based differences affect agricultural productivity? In many
socioeconomic settings, gender is a constraint to increasing agricultural
productivity. It can be argued that resource endowments such as farm size, or social
factors such as tribe or caste, may have a greater influence on factors of production
than gender. However, within each social and economic group, gender roles will
mediate the response to change and can reinforce the constraints on women.
Clearly, constraints to agricultural productivity are often gender-based. For example,
women farmers generally face more barriers than men in operating effectively in
factor markets. As a result, they incur higher effective costs for information,
technology, inputs, and credit and their productivity is lowered. Women also have
relatively lower incentives to increase productivity. They frequently produce the
food crops, whose prices are low. Besides, women's access to markets is usually
poor. Finally, husbands often control the income from the products of women's labor.
Thus, if planners are unaware of gender-based differences in agriculture, program
outcomes may not be achieved as planned.
Conversely, attention to gender-based differences in agricultural activities,
resources and benefits can improve the outcomes of agricultural development
interventions. Research suggests that equalizing the endowments of women
farmers would enhance total agricultural productivity.

Environmental economics is the application of the principles of economics to

the study of how environmental resources are developed and managed
Finance The science that describes the management, creation and study of
money, banking, credit, investments, assets and liabilities.
History of economic thought, is understanding how economists conceived of the
economy and of economic problems in different periods and settings allows current
economists to resurrect valuable theoretical insights. These inform a new economic
thinking that responds to the challenges of our own time.
Industrial organization a field of economics dealing with the strategic behavior
of firms, regulatory policy, antitrust policy and market competition. Industrial
organization applies the economic theory regarding model of price to industries.
International economics focuses on the trade, financial and development issues
facing different economies and their institutional frameworks.
International Trade is the exchange of goods and services between
countries. This type of trade gives rise to a world economy, in which prices, or
supply and demand, affect and are affected by global events.
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Labor economics is a subfield of economics that studies markets in which labour

services are exchanged for wages. It concerns itself with the interaction of various
decision makers in markets which determine the price and amount of labour
services exchanged. Also, it is an examination of how the labor market works, with
the following questions:
-What affects the unemployment rate, and how?
-What affects the labor participation rates, and how? An examination of how
employers & employees interact.
-What are the consequences on human capital accumulation?
-What are the consequences of marital patterns in the labor market? An
examination of how agents react to, and shape social rules and forces, and hence
affecting their choices.

Law and economics.

What Does Economics Have to Do with Law?
The fundamental assumption of the economic approach, to law and everything else,
is that people are rational.
The law and economics movement applies economic theory and method to the
practice of law. It asserts that the tools of economic reasoning offer the best
possibility for justified and consistent legal practice. It is arguably one of the
dominant theories of jurisprudence. The law and economics movement offers a
general theory of law as well as conceptual tools for the clarification and
improvement of its practices.
The general theory is that law is best viewed as a social tool that promotes
economic efficiency, that economic analysis and efficiency as an ideal can guide
legal practice. It also considers how legislation should be used to improve market
conditions in return. Law and economics offers a framework with which to model
legal outcomes, and common objectives with which to unify disparate areas of legal
activity. The bringing together of legal theory and economic reasoning has also
created new research agendas in the fields of behavioral economics: how rationality
affects people's behavior within legal scenarios; public choice theory and how
collective behavior should have an effect on legislation; and game theory:
understanding strategic action in a legal context.

Public economics is a branch of the field of economics focused on studying the

public sector and examining the ways it interacts with the private sector. A variety
of topics are covered, including taxation, welfare, and the impact of social policy on
economic health. People who study and apply public economics work in financial
Page | 14

institutions, colleges and universities, and private think tanks, as well as

government agencies, and many possess advanced degrees such as master's and
PhD degrees in economics.
This area of economics is concerned with examining the interface between private
and public economic activities, and looking at how government policy and economic
policy in particular impact the economy as a whole. Topics like government
expenditure and investment, different types of governments and their approach to
economic issues, and government borrowing and lending are popular topics of
research in public economics. This field can include research in the field, as well as
analysis of current and historical economic activities.
Public economics focuses on answering two types of questions

How do government policies aect the economy?

How should policies be designed to maximize welfare?

Method of economics
Positive economics is defined as the "what is" of economics, while normative
economics focuses on the "what ought to be". Also, it is based on fact.
Positive Economics, is a branch of economics that has an objective approach, based
on facts. It analyses and explains the casual relationship between variables. It
explains people about how the economy of the country operates. Positive
economics is alternatively known as pure economics or descriptive economics.
When the scientific methods are applied to economic phenomena and scarcity
related issues, it is positive economics. Statements based on positive economics
consider whats actually occurring in the economy. It helps the policy makers to
decide whether the proposed action, will be able to fulfill our objectives or not. In
this way, they accept or reject the statements.
Normative economics uses value judgments, opinions, beliefs is called
normative economics. This branch of economics considers values and results in
statements that state, what should be the things. It incorporates subjective
analyses and focuses on theoretical situations.
Normative Economics suggests how the economy ought to operate. It is also known
as policy economics, as it takes into account individual opinions and preferences.
Hence, the statements can neither be proven right nor wrong.

BASIS FOR
COMPARISON
Meaning
Page | 15

What it does?
Nature

Perspective

Analyses cause and effect

relationship

Study of

and judgment is normative

economics.
Prescriptive

Objective
Passes value judgment
Testing

What actually is

Economic issues

Statements can be tested

using scientific methods
It clearly describes
economic issue

POSITIVE ECONOMICS
A branch of economics
based on data and facts is
positive economics
Descriptive

Page | 16

NORMATIVE
ECONOMICS
A branch of economics
based on values, opinions

Subjective
What ought to be.
Statements cannot be
tested.
It provides solution for the
economic issue, based on
value