Methods of Study in Economics Essay Example for Free

Methods of Study in political economy EssayThis method is withal called as abstract, analytical and priority method. Under this method, laws atomic number 18 deduced in a logical manner. On the basis of certain fundamental assumptions or accepted axioms (principles) or truths which have been naturalised and handed down from generation to generation, the required conclusions are found out. This method is called as abstract since it is establish on abstract reasoning and not actual facts. However, actual lieu 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 tinny and sell dear ones. However, in actual situation this may not happen because of the absence of fit knowledge and market conditions. The principle steps in the process of deriving economic generalizations through deductive logic are1.perception of the problem2.defining the technical terms and making the enamour a ssumptions 3.deducing hypothesis and4.testing of hypothesis deduced.through and through the use of deductive method, many theories and generalizations have been established in economics. It is called as inverse relationship betwixt the price and quantity 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 part true (ii) valid 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.Inductive 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 skid proceeds from the particular to the general. The generalizations are based on observation of individual examples.The principle steps in this method arePerception o f the problemCollection, 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 assay of the principles.Many researches in macroeconomics have been obtained through inductive method such as principle of speedup 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 nether mentioned facts Statistical initiation leading to precise, exact 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 insufficient number of facts Difficulties involved in the collection of factsThe fact that observatio n and experimentation have very limited application in a science that deals with human activities.Referencehttp//classof1.com/homework-help/economics-homework-help