Deductive Reasoning In Macroeconomics

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Register to read the introduction… An economy may at times be unstable, characterized by high unemployment and severe inflation. The causes of instability and attempts to stabilize the economy by government regulation are the subject matter of macroeconomics.


Applied economics is a term that refers to the application of economic theory and analysis


Deductive economics starts with a set of axioms about economies and how they work, and relies on these principles to explain individual cases or events. Supply and demand analysis, a staple in any introductory economics course, is an example of deductive reasoning because it involves a set of generally accepted principles about demand and supply. To summarize, deduction in economics starts with a generally accepted principle and proceeds to the specific


Inductive reasoning in economics does the reverse of deductive reasoning; namely, it begins with an individual problem or question and proceeds to form a general principle based on the evidence observed in the real world of economic activity


is the branch of economics that concerns the description and explanation of economic phenomena . It is concerned what is

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Marginal rate of transformation

The slope of the production-possibility frontier (PPF) at any given point is called the marginal rate of transformation (MRT). It describes numerically the rate at which one good can be transformed into the other. It is also called the (marginal) "opportunity cost" of a commodity, that is, it is the opportunity cost of X in terms of Y at the margin. It measures how much of good Y is given up for one more unit of good X or vice versa. The shape of PPF is commonly drawn as concave downward to represent increasing opportunity cost with increased output of a good. Thus, MRT increases in absolute size as one moves from the top left of the PPF to the bottom right of the

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