Course Name: Introduction To Economics
Course Code: ECO401
INTRODUCTION TO ECONOMICS
What is Economics
Economics diverges from natural sciences like chemistry and biology, focusing on the study of
people in society. Lab experiments are infeasible, and the intricacies of human decision-making
are challenging to fully unravel.
"Economics is the study of how individuals engage in the production, distribution, and
consumption of goods and services in society."
The term "economics" stems from the Greek words "oikos" (house) and "nomos" (custom or
law), signifying "rules of the household." Another definition is: "The science that studies human
behavior as a relationship between ends and scarce means with alternative uses."
Branches Of Economics
Normative Economics
Normative economics involves value judgments on the desirable aspects of the economy and
supports specific policies. It addresses what the economy should be, expressing opinions on
problem-solving, such as reducing unemployment.
Examples:
1. A normative economic theory not only describes how money-supply growth affects inflation
but also provides instructions on policy.
2. A normative economic theory outlines the impact of interest rates on inflation and suggests
policy guidance.
Positive Economics
Contrastingly, positive economics analyzes facts and behaviors in the economy, focusing on
"what is." It deals with observable phenomena, like the increasing unemployment rate.
Examples:
1. A positive economic theory describes the impact of money-supply growth on inflation without
prescribing specific policies.
2. A positive economic theory explains how interest rates affect inflation without offering
guidance on policy.
Course Code: ECO401
INTRODUCTION TO ECONOMICS
What is Economics
Economics diverges from natural sciences like chemistry and biology, focusing on the study of
people in society. Lab experiments are infeasible, and the intricacies of human decision-making
are challenging to fully unravel.
"Economics is the study of how individuals engage in the production, distribution, and
consumption of goods and services in society."
The term "economics" stems from the Greek words "oikos" (house) and "nomos" (custom or
law), signifying "rules of the household." Another definition is: "The science that studies human
behavior as a relationship between ends and scarce means with alternative uses."
Branches Of Economics
Normative Economics
Normative economics involves value judgments on the desirable aspects of the economy and
supports specific policies. It addresses what the economy should be, expressing opinions on
problem-solving, such as reducing unemployment.
Examples:
1. A normative economic theory not only describes how money-supply growth affects inflation
but also provides instructions on policy.
2. A normative economic theory outlines the impact of interest rates on inflation and suggests
policy guidance.
Positive Economics
Contrastingly, positive economics analyzes facts and behaviors in the economy, focusing on
"what is." It deals with observable phenomena, like the increasing unemployment rate.
Examples:
1. A positive economic theory describes the impact of money-supply growth on inflation without
prescribing specific policies.
2. A positive economic theory explains how interest rates affect inflation without offering
guidance on policy.
