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Positive economics as a science concerns the investigation of economic behavior. [4] It deals with empirical facts as well as cause-and-effect behavioral relationships and emphasizes that economic theories must be consistent with existing observations and produce precise, verifiable predictions about the phenomena under investigation.
The law of supply is a fundamental principle of economic theory which states that, keeping other factors constant, an increase in sales price results in an increase in quantity supplied. [1] In other words, there is a direct relationship between price and quantity: quantities respond in the same direction as price changes.
Economist Dean Baker disagrees and says that “housing wealth effect” is well-known and is a standard part of economic theory and modeling, and that economists expect households to consume based on their wealth. He cites approvingly research done by Carroll and Zhou that estimates that households increase their annual consumption by 6 cents ...
In economics, a normal good is a type of a good which experiences an increase in demand due to an increase in income, unlike inferior goods, for which the opposite is observed. When there is an increase in a person's income, for example due to a wage rise, a good for which the demand rises due to the wage increase, is referred as a normal good.
In these macroeconomic models with sticky prices, there is a positive relation between the rate of inflation and the level of demand, and therefore a negative relation between the rate of inflation and the rate of unemployment. This relationship is often called the "New Keynesian Phillips curve".
The concept of spillover in economics could be replaced by terminations of technology spillover, R&D spillover and/or knowledge spillover when the concept is specific to technology management and innovation economics. [2] Moreover, positive or negative impact often creates a social crisis or a shock in the market like booms or crashes. [1]
Engel's argument is formalized in neoclassical consumer theory, which conceives of the relationship between income and consumption patterns in terms of utility optimization. In such models, consumers allocate their expenditures to goods and services with the highest marginal utility. After basic needs are satiated, the marginal utility from ...
Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative ... Much of economics is positive, ...