Untitled | Flashcards

Question	Answer
Behavioural economics	Research that adds elements of psychology to traditional models in an attempt to better understand decision-making by investors, consumers and other economic participants.
Ceteris paribus	To simplify analysis, economists isolate the relationship between two variables by assuming ceteris paribus – i.e. all other influencing factors are held constant.
Economic assumption	In his 1953 essay titled "The Methodology of Positive Economics, Milton Friedman explained why economists need to make assumptions to provide useful predictions. Friedman understood economics couldn't use the scientific method as neatly as chemistry or physics, but he still saw the scientific method as the basis. Friedman stated economists would have to rely on "uncontrolled experience rather than on controlled experiment."
Economic mode	A simplified representation of economic processes. This representation can be used to gain a better understanding of the theory.
Microeconomics	Study of economics at the level of the individual firm, industry or consumer/household.

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	Created by Shaylen Patel-Shah almost 2 years ago