y Economics is

y Science

Science y Normative Science y Both y Art y Both

y Positive

Economics is a Science
y A Subject is science if: y It is a systematised body of knowledge which studies the relationship b/w cause and effect. y It is capable of Measurement. y It has its own Methodological apparatus y It should have the ability to forecast.

y Economics as science: y It studies cause and effect relationship b/w economic phenomena. e.g. Law of demand: explains the cause and effect relationship b/w price and demand for a commodity. y It is capable of being measured in terms of money. y It has its own methodology of study. (i.e. induction & deduction). y It forecasts the future market condition with the help of various statistical and non-statistical tools.

y But economics is not perfect science: y Economists do not have uniform opinion about a particular event. y The subject matter of economics is the economic behaviour of man which is highly unpredictable. y Money which is used to measure outcomes in economics is itself a dependent variable. y It is not possible to make correct predictions about the behaviour of economic variables.

Ec

ics is a Art

y Art is nothing but practice of knowledge. y Art is Practical. y Economics as an art y Its various branches, consumption, production and public finance, etc. provide practical solutions to various economic problems. y It helps in solving various economic problems which we face in our day-to-day life.

Economics is both a Science and an rt

y Science teaches us to know, art teaches us to do. y Science is theoretical, art is practical. y Economics is a science in its methodology & art in its

application. E.g. Study of unemployment problem is science but framing suitable policies for reducing the extent of unemployment is an art.

Economics as Positive Science

y Positive science: y (+)ve or pure science analyses cause and effect relationship b/w variables but it does not pass value judgment. y According to Robbins, Economics is concerned only with the study of the economic decisions of individual and society as positive facts but not with the ethics of these decisions. y E.g. An individual with a limited amount of money may use it for buying liquor & not milk. A Community may use its limited resources for making guns rather than butter.

y Normative Science y As normative science, economics involves value judgments. It is prescriptive in nature and described what should be the things. y E.g. The questions like what should be the level of national income, what should be the wage rate, how the fruits of national product be distributed among people all fall within the scope of normative science. y While value judgments by different individuals will be different and thus for deriving laws or theories, it should not be used. y Conclusion: y While laying down laws or theories, economics may be treated as pure and positive economics, but as a tool of practical application it must have some normative goals in view.