Methods of Study in Economics Essay Example for Free

Methods of Study in Economics EssayThis method is also called as abstract, analytical and priority method. beneath this method, laws are deduced in a logical manner. On the basis of certain fundamental assumptions or accepted axioms (principles) or truths which have been established and handed strike down from generation to generation, the required conclusions are found out. This method is called as abstract since it is based on abstract reasoning and not actual facts. However, actual blot may differ from what deductive logic suggests.For example, it is assumed that the man is rational and on the basis of this it is deduced that he will buy cheap and sell honorable ones. However, in actual situation this may not happen because of the absence of proper knowledge and market conditions. The principle steps in the process of lineage economic generalizations through deductive logic are1.perception of the problem2.defining the technical terms and making the appropriate assumption s 3.deducing hypothesis and4.testing of hypothesis deduced.Through the use of deductive method, many theories and generalizations have been established in economics. It is called as inverse kind between the price and amount demanded, the direct relationship between the price and quantity supplied etc. However, this method also suffers from certain handicaps such as (i) assumptions generally turn out to be untrue or partially true (ii) effectual conclusions cannot be drawn in the absence of proper knowledge of the whole situation and (iii) it is dangerous to claim universal validity for the economic generalizations so deduced.inducive methodAccording to this method, conclusions are drawn on the basis of collection and analysis of the facts which are relevant to the inquiry. The logic in this case proceeds from the special(prenominal) to the general. The generalizations are based on observation of individual examples.The principle steps in this method arePerception of the problemC ollection, classification and analysis of data by using appropriate statistical techniques Finding out the reasons for the relationship established through statistical analysis and to set rules for the verification of the principles.Many researches in macroeconomics have been obtained through inductive method such as principle of acceleration describing the factors which determine investment in an economy, the nature of consumption function describing the relationship between income and consumption etc.Inductive method is increasingly being used on account of the under mentioned facts Statistical induction leading to precise, guide and measurable conclusions It underlines the importance of relativity of economic laws and It shows that generalizations are valid only under certain conditions. However, this method suffers fromRisk of hurried conclusions having being drawn from an depleted number of facts Difficulties involved in the collection of factsThe fact that observation and e xperimentation have very limited application in a science that deals with tender activities.Referencehttp//classof1.com/homework-help/economics-homework-help