Applying Economics

As a social science, economics has most of the characteristics of other sciences. Economists observe behavior and outcomes, systematically catalog those observations (by collecting data), and identify patterns and trends. Then they develop and test theories to explain the behavior, outcomes, patterns, and trends they have seen. Although economists can rarely test their theories in controlled experiments, they do seek practical applications of their theories. This application often takes the form of economic policies implemented by local, state, and federal governments. Economic policies also affect major decisions by large corporations and financial institutions. We’ll discuss economic policies in greater depth in Parts 3 ...

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