Understanding Economics as a Social Science

• Economics is primarily considered a social science, involving the study of people and societies.

• The scope of economics encompasses the analysis of how individuals, businesses, governments, and nations make decisions about how to allocate resources.

• In this sense, economics is about dealing with scarcity, making choices, and the consequences of those choices.

• As a social science, economics relies on observable data to explain or predict trends, behaviours, or future events.

Theoretical and Empirical Approaches in Economics

• The theoretical approach in economics involves the use of economic models to understand economic behaviour.

• These models are built on assumptions and simplify the complex world into easily understandable parts, but they may not always accurately represent real-world situations.

• On the other hand, the empirical approach in economics involves the collection and analysis of data, quantitative research, statistical analysis, and other data-driven methods.

Positive and Normative Economics

• Positive economics is involved with objective and fact-based analysis, attempts to describe how things are or how an economic system works.

• In contrast, normative economics is value-laden and subjective; it endeavours to depict how things should be.

• While positive economics can be empirically tested, normative economics is based on value judgments and ethical views that can differ widely between individuals.

Microeconomics and Macroeconomics

• Economics at a glance can be divided into two main branches: microeconomics and macroeconomics.

• Microeconomics studies the behaviour of individuals and firms in making decisions regarding resource allocation. It also studies how these decisions and behaviours affect the supply and demand for goods and services, which determines prices.

• Macroeconomics, on the other hand, studies the economy as a whole. This includes large-scale economic phenomena such as inflation, GDP, unemployment rates, national income, rate of growth, and changes in the money supply.

Economic Systems

• An economic system is a way in which societies or governments organise and distribute available resources, services, and goods across a geographic region or country.

• There are three main types of economic systems: market economies (where decisions about production and pricing are made by businesses and consumers), command economies (where the government makes these decisions), and mixed economies (which combine aspects of market and command economies).

Remember, economics as a social science is not an exact science. While it strives to make valid economic predictions and explain economic phenomena, results will often vary due to unforeseen complexities and variables in human behaviour and decision-making processes.