Economic theory

According to Kindleberger, “An economic theory is a statement of the relationship among economic variables. It is a simplified representation of a real situation. Economic theories are broadly divided into two groups- Micro and Macro economic theories. A micro economic theory explains the relationship between two individual variables. A macro economic theory expresses the relationship between two aggregate variables.

PPT describes Economic theory and its special features

1. Theory Theories are sets of concepts and generalizations so arranged to explain and predict possible relationship among phenomena. A theory is a simplified representation of how two or more variables interact with each other simplify it down to its essentials. A theory or model may be expressed in words, charts, diagrams or in mathematical form

2. According to Kindleberger , “An economic theory is a statement of relationship among economic variables. It is a simplified representation of a real situation. Economic theories are broadly divided into two groups- Micro and Macro economic theories. A micro economic theory explains the relationship between two individual variables. A macro economic theory expresses the relationship between two aggregate variables

3. The construction of an economic theory is just like the step by step construction of a building . scientific observation and investigation emergence of a problem collection of necessary and relevant data Systematic classification and analyse conclusions or generalizations. Generalization form the hypothesis Testing and verification

4. Characteristics of Economic theories An economic theory explain economic situation. Economic theories, though scientific in character, are being revised and sometimes refuted. Statistically hypothetical

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