What is the philosophy of economics?

Economics philosophy is a set of theories or hypotheses that explain various economic results. Philosophies generally ask why and how something is. Economic theory and causal link that deals with rare resources allocation seeks to explain the causes and subsequent relations between two or more economic factors.

An example of an economy philosophy is the theory of supply and demand. Those who formulated theory suggest that the prices of goods and services be sensitive to voices of supply and demand. There are some goods that are more sensitive to price than others. For example, commodity prices such as petrol fuel will usually respond more to supply changes than changes in demand. The philosophy of economics also seeks to explain the relationships between two or more factors and predict the results of social behavior.

There are different groups of thinking or theories that form the philosophy of economics. Some groups may feel that the level of production of overall economy or gross domestic product is not affectedNěna by changing interest rates or prices. Other groups feel that changes in leading economic indicators, such as the level of unemployment, directly affect the level of annual economic production. Every thought explains how rational choices lead to a certain macroeconomic result.

Economics philosophy does more than just come up with theories and hypotheses for economic results. It also actively studies these results and different ways that the macro economy responds to various business activities and consumers' selection. As social science, the area of ​​the economy is sometimes somewhat unpredictable and highly subjective. Examination of various economic views on the main political personalities is sufficient to prove a point.

, for example, in United States, the Republican Party generally keeps the philosophy that tax reduction will stimulate consumer expenditure and job creation. On the other hand, a democratic party is usuallysharply against privatization and generous tax cuts. They believe in greater government control over the division of income and tend to prefer increased government expenditure on social services. The type of social services that the Democratic Party tends to prefer is usually beneficial to disadvantaged members of society or contribute to the overall well -being of society, such as environmental causes.

those who study the economy will also look for methods to demonstrate their theories. They can conduct experiments, surveys, focus groups or some other primary research method to see how and why a result is manifested. This can also lead to the development of new hypotheses.