Wednesday, January 21, 2009

Economics as a Science

Economics, like other social sciences, make little use of laboratory methods in which changes in variables can be explained in controlled conditions. Economics usually have to examine what has already happened in the past in the real world in order to test their theories. If a simple model can explain observed behavior repeatedly, it has some value, for example, law of demand explains cause and effect relationship between price and demand for a good.

Economics is not an exact science because it depends upon economic behavior of a man and behavior of a person is complex and unpredictable. Economics is a social science, which is concerned with proper use and allocation of resources for achievement and maintenance of growth with stability.

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