1.Introduction to Economics

In this introductory segment, you will learn the following concepts

1. What is Economics?

2. Microeconomics and Macroeconomics

3. Positive and Normative Economics

Economics can be broadly separated into two branches: microeconomics and macroeconomics. You will be focusing on microeconomics in JC1 and macroeconomics in JC2.

What Is Macroeconomics?

Macroeconomics can be defined as the study of the economy as a whole, focusing on aggregate characteristics and economy-wide factors such as interest rates, inflation, growth and unemployment at the national level.

What Is Microeconomics?

Microeconomics can be defined as the study of the economic behaviour of individuals and firms in different markets, such as the markets for cupcakes, petrol and smartphones.

Statements in economics can be categorised into positive and normative economics.

Positive economics could be defined as the branch of economics that describes and explains economic phenomena, focusing on facts and cause-and-effect relationships. It includes the development and testing of economic theories, and is sometimes referred to as value-free (i.e. objective) economics.

Normative economics is a part of economics that expresses value judgements. This could be about what is deemed fair, what the outcome of the economy should be, and what policy measures ought to be used. These statements cannot be proven true or false.

Read Pages 3-4 of your lecture notes as you view this video.

Answer the following questions to test your understanding.