Economic Theory
Economic theory refers to the broad set of beliefs in the way various economic processes work. An example is the classic economic theory of supply and demand. This states that goods are limited in supply and the desire for them is unlimited. Because of this there is a constant battle between the competing interests of supply and demand. … Keep Reading → Economic theory is closely tied to the science of econometrics. Econometrics involves the statistical measuring of economic assumptions. This allows for the testing of economic theories to determine their validity. It is common for economic theories to disagree with other economic theories. An obvious example of this would be the economic theories of capitalism and socialism. Capitalism states that through individuals producing goods and services for personal gain, the overall economy will benefit. Socialism states that people will be more productive by collectively owning the means of production and sharing the wealth. The battle between these two economic theories has had far reaching implications.
