**What are the basic methods of analysis used by Economists? Briefly and convincingly discuss each of them.**

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- ABOUT
- CONTACT US
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- PUBLICATIONS
- ASSIGNMENT AND QUIZ
- INSPIRATION
- NEWS
- LIFESTYLE
- SOCIO-ECONOMIC ISSUES
- SPORTS UPDATE
- ICT UPDATE
- INEWS
- SCHOLARSHIPS
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- Shop
- Wishlist
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- You Are On a Journey and You Will Get There (Book)
- Just a Fruit (Book)
- Pathway to Success and Excellence Book

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**What are the basic methods of analysis used by Economists? Briefly and convincingly discuss each of them.**

Name: Ikeh Nnamdi Samuel

Department: Economics/psychology

Reg No: 2020/246207

Faculty: Social sciences

Question: Methods of Economic Analysis

Deductive Method

This is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

* Observation of a task/ issue

* Making the hypothesis

* Testing the hypothesis using more observations, etc.

Inductive Method

This type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods.

Data is collected about a particular economic theory and then conclusions are drawn. The stages in this method are:

*Observation

*Formulation of a hypothesis

*Generalizing principles

“Verifying against actual facts.

Name: Onyelonu Chidire Victory

Reg no: 2020/246205

Department: Combined social sciences(Economics and psychology)

Faculty: Social sciences

Email: victorychidi223@gmail.com

Questions: what are the basic method of analysis used by Economists?

The word ‘economics’ comes from two Greek words, ‘eco’ meaning home and ‘nomos’ meaning accounts. The subject has developed from being about how to keep the family accounts into the wide-ranging subject of today.

Economics has grown in scope, very slowly up to the 19th century, but at an accelerating rate ever since. Today it has many of the features of a language. You may already have studied economics and there is the danger that the language that you learnt has changed, so be careful!

Economics is the study of scarcity and its implications for the use of resources, production of goods and services, growth of production and welfare over time, and a great variety of other complex issues of vital concern to society. And there are methods of analysis Economics which are:

(1). Inductive reasoning: This type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. Data is collected about a particular economic theory and then conclusions are drawn. The stages in this method done through observation, formulating hypothesis, generalizing principles and verifying against actual fact. One of its advantages is that it is more realistic and reliable. And one of its disadvantages is that it’s a time consuming process and expensive.

(2). Deductive reasoning: This is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning through: observation, of a task, making the hypothesis, testing the hypothesis using more observations, etc.This reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws. One of the advantages of these method is that for economists as it focuses upon economic reasoning which is of paramount importance. and one of its disadvantages is that it’s logical fallacy.

This implies that the two methods or reasoning differs methodologically.

Name: Ukachukwu Chinelo Esther

Reg No: 2015/202410

Department: Economics Education

Faculty: Education

QUESTIONS: METHODS OF ECONOMIC ANALYSIS

Economics is the study of how people allocate scarce resources for production, distribution, and consumption, both individually and collectively. It focuses on the actions of human beings, based on assumptions that humans act with rational behavior whereby they seek the most optimal level of benefit or utility. Economics can generally be broken down into macroeconomics which concentrates on the behavior of the economy as a whole ie it it examines overall economies on a regional, national or international, and microeconomics which focuses on individual people and businesses ie the behavior of individual consumers and producers. However these two branches of economics use very different theories, models, and research methods, which sometimes appear to conflict with each other.

Generalisations in economics have been derived in two ways:

(1) Deductive Method; This consists of deriving conclusions from general facts, with general principles and applies conclusions. The steps involved in deductive method includes; perception of the problem, definition of terms, deducing hypothesis from assumptions, testing of hypothesis. It has its merits and demerits. The merits include; it is less time consuming and less expensive, it uses mathematical techniques in deducing theories, it helps in deriving economic theories, it is simple because it is analytical.

It’s demerits include; it’s assumptions might be wrong, it is not applicable universally, it is also highly abstract.

(2) Inductive Method: This involves data collection about certain economic phenomenon. It involves the process of reasoning from particular facts to general principles. The steps of inductive method include; observation, formation of hypothesis, generalization and verification. This method has its merits and demerits.

It’s merits includes; it is based on facts ie, the method is realistic, if conclusions are drawn from insufficient data, the generalization obtained may be faulty, collection of data is not an easy task. Lastly, it is time consuming and expensive.

This shows that both methods have their own faults and weaknesses and cannot be exclusively relied on.

Name: RAWLINGS OTSONU

Jamb Reg No. 29752699EF

Department: Economics

Faculty: Social Sciences

Assignment Question: Meaning of Economics and Behavioural Economics

Responses: The meaning of Economics, a derivative of the Greek word ‘economy’ has been succinctly defined by different scholars based on their own understanding of the subject. In line with the word “economy”. Economy is a Greek word’oikovouoc meaning One who manages a household”). It is a composite word derived from oikoc, (house) and veuw (“manage, distribute”) by the way of oikovouia, meaning household Management. And economy consist of Economic system in a certain region, comprising the production, distribution or trading and consumption of the limited goods and services in that region or country. Therefore, economy is the total sum of product and services transactions of value between two or more economic agent in a region, whether individual(s), organization or States.

Economics as a term can be defined as follows:

The classical economist, such as Adam Smith put Economics to be”the study of production, distribution and growth of wealth in society”. This definition of economics is based on the aspect of wealth and concrete economic activities that are not intangible. They emphasized basically on the physical aspect of human activities, leading to utilisation of physical resources in the society, especially in actual production, distribution and growth in a competitive economy.

That is why of of the classical economists in the person of Adam Smith defined Economics as “an inquiry into the nature and causes of the wealth of Nations”. Another school of thought, known as the Marxist understand economics to be based on the aspect of labour influencing the development of the economy and its productivity level. Their understanding level of the subject (economics) encompasses only the aspect of labour population and their effects.

The above points lay emphasis economics in micro aspect, not macro. For that reason, the social scientists postulated that economics studies the way in which societies solve the fundamental problems of reconciling unlimited desires of individuals with scarce resources, likely to be affected by numerous alternative uses. This is why I would like to adopt the definition of economics by the great economist, Professor Lord Robinson). He defined Economics as a science, which study human behaviour, as a relationship between the ends and scarce means, which have alternative. His definition is of economics is all encompassing and it covers all the Scopes and fields of economics, being macro micro.

His definition of economics is generally recognized and used by young learners.

Behavioural Economics:

This according to a scholar Atma Jaya Rosdiana Sijabat of a Catholic University in Indonesia quoted that in the traditional economics approach, ‘an individual’s decision reflect that individual’s best interests and made rationally ‘. For that, she viewed that Behavioural Economics as a field of study in Economics that integrates economics and psychology in analysing human behaviour, which is important for explaining why individuals’ decisions and behaviour may not reflect their best interests”. According to findings, Behavioural Economics has advantage for its power to explain individual’s psychological State (State of the mind) in decision making process, in both individual, group of individuals and institutions.

Some technical aspects of the behavioural economics are: pricing process and opportunity cost.

According to the view of Brzezicka and Wisniewski in 2013, Behavioural Economics is an experimental science, as it is based on experiment that combine economic deduction and psychological induction, thereby creating a complementary means of explaining human decisions.

Another scholar, known as Beenheim and Rangel in 2007 opined that behavioural economics combines the theoretical concepts with those of the state of mind, thereby allowing it to develop various models for explaining the difficult issues of warfare evaluation, which means that with the help of that, scholars would be able to use it in tackling technical problems involving both psychic and physical economic challenges because it offers theoritical and methodological means of understanding human behaviour (physical exhibition or response to stimulus or stimuli); by combining the principles of Behavioural science and micro-economics in line with the view of Kaplan et al in 2018.

MC Mahon also used the same sense to explain behavioural economics in 2015 when he said that: “The fundamental assumption of economic resources distribution is that individuals are rational beings (rational homo oeconomus, economics humans) when making economic decisions.

Also, Alm and Bordeaux in 2013 supported that stand, he reported that that was why individuals are rational in their views and decision making processes.

Reference from:

1. Acheson, J. D. Lynch, 2017.; Implications of behavioural economics for tax policy. Retrieve from http://igees'gov.ie/wp-content/uploads/2014/01/Behavioural-economics-and-Tax.pdf%5BAccessedMarch10, 2018].

2. Alm, J., 2010. Testing behavioural public economics theories in the Laboratory. National Tax Journal, 63:635-658.view@googlescholar|View at publisher, etc.

Student information

Name: UCHIN MIMI MOSES

Reg. No: 2020/242645

Department: ECONOMICS

Email: uchinmoses1@gmail.com

Attempt

Economics as a science takes on scientific approaches to arrive at theories, laws and generalizations. To achieve this, economists use methods which are basically known as methods of economic analysis. These methods are;

Deductive method

Inductive method

The Deductive method also known as the abstract, analytical or prior method involves the process of generalization that derives conclusion from general truths or phenomenal and analyses to simple conclusions. It talks about economic issues in large aggregates and uses them to draw conclusions on smaller units. For example, it may use the general price level to tackle the problem of individual demands. In summary, the deductive method moves from complex relations to simple phenomenal in tackling economic issues or drawing of generalizations.

The inductive method also known as the empirical method involves the process of reasoning from simple facts to general principles. This method of analysis derives economic generalizations on the basis of experimentations, observations and statistical methods. In summary, it deals with economic relations from simple to complex. For example, the price of a particular commodity could be used to draw conclusions on the general price level in the market.

NAME: Nweke Dominic Ede

Reg No:2018/243563

Dept: Public Administration and Local Government

Email Address: domnweke81@gmail.com

METHODS OF ECONOMICS ANALYSIS

Like any other science, Economics adopts two important methods in its investigations and formulation of laws and principles. The two methods are:

Deductive Methods and Inductive Methods.

Deductive Method of Economics Analysis is known as the analytical abstract a priori method. Here we start with certain formal data and assumptions. Then by logical reasoning we arrive at certain conclusions. We start with undisputed fundamental facts and after adding some assumptions we build up a theory. For instance, it is assumed that businessmen aim at maximum profit. It follows from this that businessmen buy the materials in the cheapest market and sell it in the dearest market.

In Deductive method of Economic Analysis we proceed from the general to the particular. This is also known as an hypothetical method for some of the assumptions may not correspond to actual facts, but very near actual facts which may be used as premise for starting, reasoning and drawing conclusions. In economics we start with very simple premises and work up gradually or more and more complex hypotheses.

A complete form of deductive method consists of three stages, viz.,

(i)Observation;

(ii) Deductive reasoning and

(iii) Instance and testing by means of further observations.

Deductive reasoning provides us with hypotheses or generalizations. If the hypotheses are tested and verified with relevance to facts, we have valid economic laws.

Advantages of Deductive Method of Economic Analysis:

1. Deductive method is exceedingly simple. For example, the law that the utility derived by an individual from a commodity goes on diminishing with every successive addition is a self-evident truth from which we may draw many logical conclusions, viz., larger the stock of money, the lower shall be the utility of money; rich persons have lesser marginal utility of money than the poor people; so taxes should not be levied on proportional basis. If taxes are levied proportionately, the sacrifice of the poor will be larger than the rich. This is against the Canon of equity, etc. Thus the principle of progressive taxation is derived from the law of diminishing utility through deductive reasoning.

2. Deductive method obviates the necessity of experimentation. Economics being a social science, experimentation may not be available as in the case of physics or chemistry. So, the next best alternative to experiment is deductive reasoning. According to Boulding this method of deductive reasoning is the method of intellectual experiment.

3. The deductive method results in accuracy and exactness in generalization, because of logical reasoning. The method gives a very high standard of precision in abstract economic reasoning.

Disadvantages of Deductive Method of Economic Analysis:

1. Deduction is based mainly on assumptions which are perfectly valid. If assumptions are wrong, generalizations made on the basis of wrong assumptions will be imperfect and invalid. All economic laws are based on too many assumptions where there are more scope for committing errors through wrong hypotheses.

2. In deduction there is too much of abstraction and economists by means of their intellectual exercises produce only “intellectual toys” having little connection with reality.

3. Deductive generalizations started on wrong premises will be dangerous when such generalization claim universal validity. Then such faulty generalizations are made use of in framing government policies, the results would be nothing but disastrous. For example, J.B.Say, claimed universal validity for his ‘Law of Markets’ in which he maintained that supply creates its own demand and there will not be over-production in the market. But this celebrated ‘Law of Market’ was torn to pieces when critics proved that Say’s Law was wrong and overproduction would be possible.

(2) Inductive Method of Economic Analysis

In this method, economists proceed from a practical angle to problems of science to reduce the gulf between theory and practice. Induction is done by two forms, viz. experimentation and statistical form. Facts are collected first, arranged and conclusions are drawn. Then these general conclusions are further verified with reference to actual facts.

The inductive method is generally associated with the statistical form of inductions. The statistical approach has a larger field in economic investigations than the method of experimentation. Further, the method of statistical induction is indispensable for the formulation of economic policy. Malthus presented his famous theory of population only after studying the facts of population in various countries; He then used statistics to support his theory. Similarly Engel, the German statistician employed inductive method and used statistics to formulate his law of consumption.

Advantages of Inductive Method of Economic Analysis:

1. It is highly practical add realistic as it describes things as they are.

2. It is helpful in verifying the conclusions of the deductive method.

3. Economic laws under this method are not universal but valid only under certain conditions.

Disadvantages of Inductive Method of Economic Analysis:

1. When the investigators lack a balanced judgement there is the risk of drawing hurried conclusions based on inadequate and irrelevant facts and data.

2. Collection of facts in the inductive process is a highly complex and complicated job warranting extraordinary understanding to alienate economic from non-economic factors.

3. Mere induction alone will not deliver goods unless it is supplemented by means of deductive reasoning. Without deduction, the inductive method would result in producing only a mass of unrelated and unconnected facts.

Deductive or Inductive?

From the above discussion, we can infer that there is no point in pleading one method against the other. The two methods have to be made use of or blended to achieve the required objective. The two methods, deductive and inductive, are not competitive, but complementary in nature helping the investigator.

NAME: OMEKE PRECIOUS OGECHI

REG. NO: 2020/243294

DEPARTMENT: PUBLIC ADMINISTRATION AND LOCAL GOVERNMENT

EMAIL: preciousomeke1@gmail.com

COURSE CODE: ECO 101

ECONOMIC ANALYSIS

Economic analysis can be seen as the study of economic system which is the study of a production process or an industry. Economic analysis is all about analysing the economic aspects of things.

METHODS OF ECONOMIC

ANALYSIS

The basic methods of economic analysis are:- Deductive method and Inductive method or reasoning.

DEDUCTIVE/DEDUCTION

METHOD OR REASONING

Deductive method is also known as an abstract, analytical or priori reasoning. The analysis start from unchallenged elementary or rudimentary facts or assumptions and then arrive at a conclusion using Logical analysis or one personal analytical abilities. So in general, Deductive method consists in deriving conclusion from general truths.

STEPS IN DEDUCTIVE METHOD OR REASONING

* Identify the problem:- You need to know the problem in other to get the solution.

* Make assumptions about the problem.

* There should be a logical deduction to derive implications.

* Formulation or making of hypothesis.

* Make predictions and test the hypothesis deduced using more observation.

* Predictions should be in agreement with facts.

“Note, ‘Deductive reasoning gives us hypothesis and if the hypothesis gets verified, we will have a general economic principles of law.'”

INDUCTIVE METHOD OR REASONING

Inductive method is also known asa Empirical method. This method is a type of reasoning that flows from facts to theory. First of all, there will be a collection of information or facts and then providing of evidence using economic theory and facts. Inductive method derives economic analysis on the basis of experience and observations. Inductive method formulate principles using sub-methods they are:- Observations, Experimentations and Statistical methods.

STEPS IN INDUCTIVE METHODS

* Identify the problem.

* Define the technical terms and alterables related to the problem found.

* Collection of datas about the variables related to the problem.

* Procession of the data collected to find out how the variables are related.

* Make predictions or foretales on the problem and test them.

* Predictions are in agreement with facts.

the methods of economics analysis

inductive method is generally associated with the statistical form of inductions .the statisfical approach has lager field in economic investigations than the methods of experiemental futher. the methods of statistical inductions is indispensible for the formulations of economic policy .mathus presented the famous theory of populations only after studing the facts of populaton in various countries ,he then used statistics to support the theory

2,Deductive method is know as the analytical abstract a piror method .with certain formula ,data and assumptions then by logical reasoning we arrive at certain conclusions .we start with indisputed fundamental facts and after adding some assumption we build up a theory .for instance it is assumed that bussinessmen aim at maximum profit .it follow from this that bussiness men buy the materials in the cheapest market and sell in the dearest market

Favour Chinenye Amalaha

20160903IA

dectectivefavor@gmail.com

The basic methods of analysis used by Economists include,

Deductive Reasoning

Inductive Reasoning

Deductive Reasoning

Deductive Reasoning, also called a priori method, analytical, or abstract method, is an excellent definition of the best expression “moving from the known to the unknown.”

Here, economists makes conclusion from facts by applying logical reasoning. The whole process starts with identifying a problem, then deriving premises, deducing a hypothesis from the already formed premises, and using logical reasoning to deduce and test the theory. However, this method of analysis creates room for fallacy.

Inductive Reasoning

The empirical or inductive analysis method is based purely on experience or experiments, observation, and statistical evaluation. After identifying and defining the problems, an economist will move to gather enough data on all the possible variables. The vast data collected is then processed to construct theories. However, unlike the deductive reasoning approach, inductive reasoning tests these new theories against existing ones. And to ensure the success of this method, economists must collect sufficient data.

Name: Abraham Chibuike Sunday

Reg no:20033827AF

What are the basic method of analysis used by economist.

First before I stated them let me quickly define economic analysis.

Economic analysis involves the formulations of laws and generalization through two method.

Now heat are the basic method of analysis used by economists.

1) Deductive method.

2) Inductive method.

1) Deductive method: Now this method can also be called priori reasoning.It is involves the observation of issues,making and building hypothesis using more observation and if adopted then it becomes an economic law. This method is easy as only simple deduction is necessary and boost economic reasoning.

2). Inductive method: This type of reasoning flows from information, facts,and theory.In this type we first gather facts,information and then move towards bringing proves using economic theory,information and facts.

Three ways of formulating economics principles and theories.

1) observation

2) Econometric method or statistical.

3) experimentation.

Name Abraham Chibuike Sunday

Course Public administration

Chukwu Emmanuel Chimezie

2020/241925

emmanuelchukwu846@gmail.com

2 methods of economic analysis includes: Deductive method and Inductive method.

Deductive method also called Abstract or analytical method. The Deductive method is unique on it’s own in the sense that it does not involve empirical method. It is not based on experiments.

steps involved in Deductive method are:

1. perception of the problem: get to know what the problem entails

2. define precisely and clearly the technical terms.

3. deduce hypothesis from assumptions

4. test the hypothesis

The Inductive Method(empirical method):

It deals with experience and observations. it is in this method that data are collected with regard to a certain phenomenon and from the observations and data collected, they make generalizations. 3 ways which can be used for deriving economic principles includes;experimentation, Observation and econometric method.

Steps involved in Inductive method

1. Get to know the problem

2. define technical terms

3. Collect data and do some preliminary thinking about the possible functional relationship between the relevant variables.

4. processing of those data collected and find out the relations between variables that actually hold good.

5. testing of the processed data through statistical method

Economics analysis involves deploying various methods to analyze the economy by economists.

The basic methods of economic analysis involves two methods;

1.deductive method

2. Inductive method

The two methods are based on generalization and theory.

DEDUCTIVE METHOD.

The deductive method is also called analytical or prior method.It involves deriving conclusions from known accepted truth, takes them and applies them to draw conclusion.Take for instance, if I accept the general proposition that Nigerians are lawless. I can conclusively say that we are uncivilized. We see from above illustration that it moved from general to particular. In deductive method, conclusions cannot of your inference cannot be false given that the premises are true.

GENERALIZATION STEPS OF DEDUCTIVE METHOD.

1. Perception of the problem :

The analyst must have clear and precise idea of the problem to be inquired into.

2. Find precisely the technical terms, define them and make assumptions.

3. Deduce hypothesis :

From the assumptions made, hypothesis are deduced. The hypothesis could be null or unnull hypothesis.

4. Test the hypothesis ;

Before generalization or theories are established, hypothesis should be verified through direct observation of events and through statistical methods.

MERITS OF DEDUCTIVE METHOD

1. The deductive method is near reality, less expensive and time consuming

2. The method is simple because it is analytical

3. The method can help to derive economic theories

DEMERITS OF DEDUCTIVE METHOD

1.It is highly abstract, requires alot of care to avoid faulty economic reasoning

2. Deduction analysis is not applicable universally.

The imperfections and incorrect assumptions associated with this method that leads to faulty conclusions prompted the classical and neo- classical economists to look for alternative method of economic analysis thus the inductive method.

THE INDUCTIVE METHOD.

The inductive method also called empirical method was adopted by Historical School of Economists in a bid to improve faulty assumptions associated with the deductive method. It derives generalization on the basics of experiments, observation and statistical methods. It involves making inferences based on observed patterns or simple repetition, Often used in reference to predict about what will happen or does happen, based upon what has happened. For instance,we observe all UNN students during during rainy season. We find that 90% uses umbrella. Out of the remaining 10%, 6% wear rain coat despite that it is expensive while 4% doesn’t have umbrella nor rain coat. From the above illustration,we can easily draw conclusion that UNN students uses umbrella during rainy season unless they are devoid of common sense.

MERITS OF INDUCTIVE METHOD.

1. It’s based on facts and at such is reliable and realistic

2. Inductive method is dynamic

The changing economic phenomenon are analysed and on the basics of collected data,solution and conclusions are drawn.

3. Inductive method helps in future investigation

DEMERITS OF INDUCTIVE METHOD

1.It is time consuming and expensive

2. Data collection is not an easy task

CONCLUSION

The two methods discussed above have weakness and cannot be exclusively relied on. Modern economists believe that both methods are complimentary

They are partners and not rivals. Alfred Marshall said that”inductive and deductive methods are both needed for scientific thought,as the right and left foot needed for walking”.

Name: Anekwe Blessing Ifeoma.

Registration Number: 20726551IF.

Email: anekweblessing13@gmail.com.

Department: Public Administration and local Government.

WHAT ARE THE BASIC METHODS OF ANALYSIS USED BY ECONOMISTS? BRIEFLY AND CONVINCINGLY DISCUSS EACH OF THEM.

There are basically two methods of analysis used by economists, that are;

*Deductive method.

*Inductive method.

DEDUCTIVE METHOD.

Deductive method is also called abstract, analytical and a priori method and it represents an abstract approach to the derivation of economic generalizations and theories.

STEPS OF DERIVING ECONOMIC GENERALIZATION THROUGH DEDUCTIVE LOGIC.

* Perception of the problem: He/she must have a clear idea of the problem to be enquired into.

* Defining of technical terms and making of assumption (postulates or premises): Defining precisely the various technical terms to be used in the analysis and also stating clearly the assumption he makes to derive generalizations.

* Deducing hypothesis through logical deduction:

This is deriving relationship between the variables having a bearing on the phenomenon.

* Testing/verification of hypothesis: The hypothesis need to be verified before established as generalization or principles of economics.

INDUCTIVE METHOD.

This method also known as empirical method derives economic generalization on the basis of experience and observations. Here detailed data/information are collected with regard to economic phenomenon and effort is made to arrive at a generalization from the observations collected.

WAYS USED FOR DERIVING ECONOMIC PRINCIPLES AND THEORIES.

There are 3 ways used for deriving economic principles and theories, they are;

* Experimentation.

* Observation.

* Statistical or econometric method.

STEPS IN INDUCTIVE METHOD.

* Identifying the problem.

* Defining technical terms and variables related to the problem.

* Collection of data about variables related and doing preliminary thinking about possible relationship between relevant variables.

* Consumption of economic theories.

Once the theory is developed one can make predictions on its basis as in the deductive approach. If the new theory works better than the previous ones, it replaced them.

But if the predictions are against actual facts and behaviour of the economy, they are either discarded or modified by collecting more data and processing them.

The above discussion comes to a conclusion that both deductive and inductive methods are needed because they are complementary and not competitive.

NAME:ADAMGBE IORWUESE AMOS

DEPT: ECONOMICS

MATRIC NO.2020/242575

COURSE CODE: ECO 101

METHODS OF ECONOMIC ANALYSIS

(1) THE DEDUCTIVE METHOD: Deductive method is essentially a top-down approach which moves from the more general to the more specific. In other words, we start with a general notion or theory, which we then narrow down to specific hypotheses, which are then tested.

steps involved in Deductive methods are;

(1)perception of the problem

(2)postulates/making assumptions

(3)deduction of hypothesis

(4)Testing the hypothesis

INDUCTIVE METHOD:

The inductive method is more of a bottom-up approach, moving from the more specific to the more general, in which we make specific observations, detect patterns, formulate hypotheses and draw conclusions.

steps involved in inductive method includes;

(1) observation

(2) experience

(3) econometrics methods

NAME: IFEANYICHUKWU HALLELUYAH CHUKWUEBUKA

DEPARTMENT: Public Administration and Local Government

MATRIC NO: 2020/243287

The Brief explanation of the Basic analysis used economists are:

Economics like any other science, has two major methods in the creation of principles, which includes:

a) The Deductive Method of Analysis

b) The Inductive Method of Analysis

A) The Deductive Method of Analysis:

This can be know as the abstract and analytical method, which actually deals with assumptions, which are not corresponding with the actual fact and may be close to the fact, but by logical reasoning, we arrive at a conclusion. Deductive reasoning/analysis proceed from general to particular which is know as hypothetic method.

Deductive Method consists of three stages, which includes:

i. Observation

ii. Deductive reasoning

III. Testing by further observation

Advantages:

a) Because of the logical reasoning involved in the Deductive Method, it is able to provide accurate prediction in abstract economic reasoning.

b) Deductive Method unlike any other science, help economists do away with the need for experiments for arriving at their final conclusion. According to Boulding, this Deductive reasoning is know as ‘INTELLECTUAL EXPERIMENT’.

Disadvantages:

a) Deductive Method is based mainly on assumptions and not the actual facts, so therefore, if an assumption is wrong, then generalization made on the assumption is invalid.

b) In deduction, the use of the mind is too much(abstraction) , which makes them have little or no connection with reality.

B) Inductive Method of Economic Analysis:

Inductive Method unlike Deductive method include the use of experiments and statical way of gathering facts, arranging them, and then conclusions are drawn from them in reference to actual facts and connection to reality.

Advantages:

i) It is helpful in the verification and cross-checking of the conclusion made through the deductive method.

ii) It deals more on reality than abstract.

Disadvantages:

i) when it comes to gathering the facts, it is complex and complicated

ii) without deductive method, inductive Method would end up creating unrelated facts because logical reasoning was not applied before arriving at the final conclusion.

Name: Chukwu Augustina Chicheta

Matric no: 2020/243289

Department: Public Administration and Local Government

Email: chukwuaugustinac98@gmail.com

The basic method of analysis used by economist are Deductive method and Inductive method.

1. Deductive method of reasoning is a process of reasoning from one or more statements to reach conclusions.

The deductive method also known as abstract, analytical represent abstract approach to the derivation of economic generalization and theories.

The steps in the process of deriving economic generalization through deductive method are;

i. Perception of the problem.

ii. definition of technical terms and making os assumption.

iii. deducing hypothesis through logical deduction.

iv. Verification of hypothesis.

2. Inductive method of analysis is a method of reasoning in which statements are viewed as supplying some evidence, but not full assurance, of the the the conclusion.

In inductive method of analysis, one’s experiences and observations, including what’s learned from others, ara synthesized to come up with a general truth.

Here are the steps in developing economic theories through inductive method are:

i. Identifying the problem.

ii. defining the technical terms and variables related to the problem.

iii. collection of data about the variables related to the problem.

iv. construction of economic theories etc.

Eze Mmesoma Benita

2020/243277

ezebenita55@gmail.com

Public Administration and Local Govt

Question

1, what are the basic methods of analysis used by economist? Briefly and convincingly discuss each of them

Answer

1,first and foremost it’s very vital to note that every economic has it challenges,any economic Analysis involves the formulation of laws and generatization through two method which are

1Deductive method

2Inductive method

Deductive method:This is also called a prior reasoning .we start from unchallenged elementary or rudimentary assumptions/facts and then aim at conclusions(build a hypothesis or theory)using logiccal analysis as our own analytical abilities .In this kind of reasoning we go from general to specific .i.echanging your generalization to theories.The stages involved in deductive method are as follows:

*Observation of a task / issue;observe and identify the problem or the issue bcause without the problem there cannot be a theory.

*Making the hypothesis;The hypothesis needs to be made in order to test it.

*Testing the hypothesis:Test the hypothesis using more observations.

Inductive method:This type of reasoning flows from facts to theory,first we collect information and facts and then move towards providing evidence using economic theory and facts.Data is collected about a particular economic theory and then conclusion are drawn .The stages in this method include :

*Observation : observe and identify the problem or the issue

*Formulation of hypothesis:you get to formulate your hypothesis in order to test later on.

*Generalizing principle:you generalize the principle

*Verifying against actual facts:Also known testing your hypothesis because in the process of this you can actually pick the fact that are true or not.

NAME: CHIDUMEBI ONYEJE

REG NUMBER: 20683830DF

DEPARTMENT: ECONOMICS

Methods of Economics Analysis:

Like any other science, Economics adopts two important methods in its investigations and formulation of two laws and principles. The two methods are:

1. Deductive method

2. Inductive method

1. Deductive method of economic analysis: Deductive method is known as the analytical abstract, a prior method. Here we start with certain formal data and assumptions, then by logical reasoning we arrive at certain conclusions. We start with undisputed fundamental facts and after adding some assumptions we build up theory. For instance, it is assumed that business men aim at maximum profit. It follows from this that business men buy the materials in the cheapest market and sell it in the nearest market.

In deductive method of economic analysis we proved from the general to the particular. This is also known as an hypothetical method for some of the assumptions may not correspond to actual facts which may be used as premise for starting, reasoning and drawing conclusions

2. Inductive method of economic analysis: In this method, economists proceed from a practical angle to problem of science to reduce the gulf between theory and practice. Induction is done by two forms, viz ; experimentation and statistical form. Facts are collected first, arranged and conclusions are drawn. Then these general conclusions are further verified with reference to actual facts.

The inductive method is generally associated with the statistical form of inductions. The statistical approach has a larger field in economic investigations than the method of statistical induction in indispensable for the formulation of economic policy.

Name:Amadi Sylvia Chinwendu

Reg no:20649454GA

Matric no:2020/243138

Dept:Public administration and local government

METHODS OF ECONOMICS ANALYSIS

(1)DEDUCTIVE METHOD

(2)INDUCTIVE METHOD

(1)INDUCTIVE METHOD:This is also called abstract,analytical and prior method and represent an abstract approved to the derivation and theories

THE PRINCIPAL STEPS IN THE PROCESS OF DRIVING ECONOMIC GENERALISATION THROUGH DEDUCTIVE LOGIC ARE :

(a)Perception of the problem to be required into

(b)Defining precisely the technical terms and making appropriate assumption,often called postulate or premises

(c)Deducing hypothesis that is driving condusions from the premises through the process of logical reasoning and

(d)Testing of hypothesis deduced

INDUCTIVE METHOD:The inductive method method is also called empirical method drives economic generalization on the basic of experience and observations .ln the method details that are collected with regards to a certain economic phenomenon and effects is then made to arrive at certain generalisations which follows from the observations collected,but is worth mentioning that the number of observations has to be large if it can yield a valid economic generalisation one should not generalise on the basis of a very few observation .

They are three ways which can be used for driving economic principals and theories they are ;

Experimentation

Observation

Statistical or econometric method

CONCLUSION INTERGRATION OF TWO METHODS

Now the controversy which existed among the earlier economists as to weather deductive or inductive approach is more appropriate in developing economic theories and principals has been resolved the modern view point in this regards is that both are needed for the proper development of scientific economic theories,indeed the two are complementary rather than competitive.

METHOD OF ECONOMICS ANALYSIS

We have two main method of economic analysis which includes

1.Deductive and

2.Inductive reasoning/method

Deductive method is representation of an approach to the derivation of economic analysis to a certain conclusion.it also known as analytical, abstract and prior method which derives conclusion from the premises through the process of logical reasoning and a technical way of assumption.

Advantage of deductive method/reasoning

*It very easy to operate;it’s less expensive

*The use of mathematical method in Deductive logic helps the economist to introduce accurate estimate in economic principles and theory

*It also can draw conclusion with out detailed collection of data

Disadvantage of deductive method

*In Deductive reasoning is there is much of abstraction and economist through their intellectual exercises relating to reality.

INDUCTIVE REASONING also known as empirical method derives economic analysis through the basis of theory and practice.it is also associated with statistical form of induction where facts are first collected and conclusion are drawn which later turn to actual facts.

Merit of inductive method

*Inductive method of economic analysis is realistic and practical

*It helps in verifying the conclusion of the deductive method

Demerit of inductive method

*Inductive method has its demerit which includes; drawing conclusion from insufficient data to obtain generalizations of economic analysis.

Ogbonna Innocent Victor

2020/243210

valentineinnocent111@gmail.com

Dept: PALG

Methods of economical analysis

Deductive method gets it’s conclusions from fundamental assumptions or from truth established by other methods

The processes involved in this method are;

*Selecting the problem

*The formulation of assumptions on the basis of which the problem is to be explored

*The formulation of hypothesis through the process of logical reasoning

*Verifying the hypothesis

Advantages

* Its a simple method: it simplifies complex problem by dividing it into component parts

* Universal: it’s more scientific which makes it more universally acceptable

* It’s efficienct

Disadvantages

*Unrealistic assumptions: when facts refute the the theory based on the tested hypothesis the assumption are also indirectly refuted. So deduction depends upon the nature of assumptions

*Incorrect verification: the verification of theories is based on observation and right observation depends upon data which just be correct .

Inductive Method

Is the process of collecting facts, arranging them and then drawing conclusions from them.

The processes involved in this method are;

*Identifying the problem

* Collecting data

*Observation

*Generalisation

Advantages

*Realistic: this method bus realistic because it’s based in facts and explains them as they are

*Statistical : this method makes use of the statistical method

*Dynamic: this method is dynamic because of its changing phenomenon which can be analysed on the basis of experiences, conclusion can be drawn

Disadvantages

Misinterpretation: this method relies on statistical numbers for analysis that can be misused when the assumption are required

*Expensive: this inductive Method is as costly as it is time consuming. The processes of data collection is a very difficult job

* Controlled experiments are not possible in economics.

METHOD OF ECONOMICS ANALYSIS

the two main method of economic analysis

Which are

1.Deductive and

2.Inductive Method/Reasoning

DEDUCTIVE REASONING: this is a representation of an approach to the derivation of economic analysis to a certain conclusion.it is also known as abstract, analytical and prior method.it draw conclusion from the premises through the process of logical reasoning and technical way of assumption.

I deductive reasoning has its merit and demerit which includes ,

Advantage of deductive method

1.its simple cause it derives important economic analysis with out detailed collection of data

2.the use of mathematical method in deductive logic helps the economist to introduce accurate estimate in economic principles and theory

Disadvantge of deductive method

*In deductive reasoning derivation of economic hypothesis and conclusion through deductive reasoning, assumption leads to a bad role

INDUCTIVE REASONING

Inductive method of economic analysis is also known as empirical method which derives economic analysis through the basis of theory and practical.it is generally associated with statistical form of induction where facts are first collected and will turn into actual facts later.

Inductive method has three ways which can be used for derivation of economic analysis which are

1.Experiment

2.Observation and

3.Econometric method

Merit of inductive method/reasoning

* It is realistic and practical

* It helps in verifying the conclusion of the deductive method

Demerit of inductive method

*It draws conclusion from insufficient data to obtain generalization of economic analysis.

METHOD OF ECONOMICS ANALYSIS

themain method of economic analysis

Which is

1.Deductive and

2.Inductive Method/Reasoning

DEDUCTIVE REASONING: this is a representation of an approach to the derivation of economic analysis to a certain conclusion.it is also known as abstract, analytical and prior method.it draw conclusion from the premises through the process of logical reasoning and technical way of assumption.

I deductive reasoning has its merit and demerit which includes ,

Advantage of deductive method

1.its simple cause it derives important economic analysis with out detailed collection of data

2.the use of mathematical method in deductive logic helps the economist to introduce accurate estimate in economic principles and theory

Disadvantge of deductive method

*In deductive reasoning derivation of economic hypothesis and conclusion through deductive reasoning, assumption leads to a bad role

INDUCTIVE REASONING

Inductive method of economic analysis is also known as empirical method which derives economic analysis through the basis of theory and practical.it is generally associated with statistical form of induction where facts are first collected and will turn into actual facts later.

Inductive method has three ways which can be used for derivation of economic analysis which are

1.Experiment

2.Observation and

3.Econometric method

Merit of inductive method/reasoning

* It is realistic and practical

* It helps in verifying the conclusion of the deductive method

Demerit of inductive method

*It draws conclusion from insufficient data to obtain generalization of economic analysis.

METHOD OF ECONOMICS ANALYSIS

In economics we have two main method of economic analysis which are

1.deductive and

2.inductive method or Reasoning.

*DEDUCTIVE REASONING:this is a presentation of approach through the derivation of economic analysis to a certain conclusion.deductive logic also Know as analytical, abstract and prior method draws conclusion from the premises through the process of logical reasoning and a technical way of assumption.it also has its demerit and merit which are;

Advantage of deductive method

*It is simple because through deductive reasoning important economic theories can be drawn with out detailed collection of data.

*The use of mathematical method in deductive logic helps the economist to introduce accurate estimate in economic principles and theory.

Disadvantage of deductive method

*The derivation of economic hypothesis and conclusion through deductive reasoning, assumption leads to bad role.

INDUCTIVE REASONING

Inductive method also known as empirical method derives economic conclusion through the basis of theory and practice.inductive reasoning is generally associated with statistical form of induction where facts are first collected and conclusion are drawn which later turn to actual facts.

Inductive method has three ways which can be used for derivation of economic principles which are

*Experiment

*Observation and

*Econometric method.

Advantage of inductive method

*Inductive reasoning is realistic and practical.

*it help in verifying the conclusion of the deductive method

Disadvantage of inductive method

Inductive reasoning has its own disadvantage which is drawing conclusion from insufficient data to obtain generalization.

Deductive Method

This is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

Observation of a task/ issue

Making the hypothesis

Testing the hypothesis using more observations, etc.

This reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws.

Advantages of Deductive Method

It is a simple method, doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

Disadvantages of Deductive Method

In this method of reasoning we start from assumptions, thus, if the assumptions happen to be logically flawed the whole process becomes faulty and would give wrong conclusions. Thus, the logical fallacy is a disadvantage of this method.

Deductive And Inductive Methods

Inductive Method

This type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods.

Data is collected about a particular economic theory and then conclusions are drawn. The stages in this method are:

Observation

Formulation of a hypothesis

Generalizing principles

Verifying against actual facts.

Advantages of Inductive Method

Since it is based on facts it is more realistic and reliable.

Using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

Disadvantages of Inductive Method

If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

It is a time-consuming process and thus expensive as well.

The collection of all the data is not an easy job and varies from person to person. As to how they collect data

Reg no__20683659DF

Department__public Administration and Local Government

Two methods of economics analysis are:

Deductive and inductive method..

1.DEDUCTIVE METHOD___This is also called a priori reasoning,it will start from unchallenged elementary or rudimentary assumptions (fact and then arrive at conclusions (build a hypothesis or theory) Using logical analysis or our own analytical abilities.In this kind of reasoning will go from general to specific..

THE STAGES INDUCTIVE method are:

a.. Observation of a fact and issues

b.. Making the hypothesis, Testing the hypothesis using more observation

__Advantage of deductive method is _

It is a simple method,it doesn’t involve the use of any complex software analysis

2 ..INDUCTIVE METHOD

This type of reasoning flows from fact to theory.first,it will collect information and facts and then move towards providing evidence using economic theory and facts ..This methods formulates principles using the observations, experimentation, statistical methods.

ADVANTAGE of inductive method

1.Since it is based on fact,it is more realistic and reliable.

DISADVANTAGE of inductive method

1.it is a time consuming process and expensive as well.

ODIGIDAWU IFEANYI

2019/249004

PURE AND INDUSTRIAL CHEMISTRY

Any economic analysis involves the formulation of laws and generalizations through two methods- deductive and inductive

Deductive Method

This is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

Observation of a task/ issue

Making the hypothesis

Testing the hypothesis using more observations, etc.

This reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws.

Inductive Method

This type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods.

Data is collected about a particular economic theory and then conclusions are drawn. The stages in this method are:

Observation

Formulation of a hypothesis

Generalizing principles

Verifying against actual facts.

NAME:UGOCHUKWU DAVID PRECIOUS

DEPARTMENT:PURE AND INDUSTRIAL CHEMISTRY

FACULTY:PHYSICAL SCIENCE

REG NO:2019/250069

WHAT IS THE BASIC METHODS OF

ANALYSIS USED BY

This process actually involves two basic methods which are Deductive and inductive.

THE DEDUCTIVE METHOD

This is method can also be referred to as a priori reasoning. We start from unchallenged elementary assumptions and then arrive at conclusions i.e (build a hypothesis or theory) using logical analysis . In this kind of reasoning, we have to go from general to specific.

The stages in deductive reasoning includes:

* Observation of a task

* Making the hypothesis

* Testing the hypothesis using more observations.

This reasoning actually gives us a hypothesis and if this hypothesis gets verified we will get a general economic principles or laws.

ADVANTAGES OF A DEDUCTIVE

METHOD

* It is a simple method, which doesn’t involve the use of any complex software analysis.

* Simple deductive logic is required.

* This method is really important for economists as it focuses upon economic reasoning which is importance.

THE DISADVANTAGES OF AN

DEDUCTIVE

METHOD

This method of reasoning will start from assumptions, thus, if the assumptions happen to be logically flawed then the whole process becomes faulty which leads to wrong conclusions.

INDUCTIVE METHOD

This kind of reasoning flows from facts to theory. We have to collect informations and then move towards providing evidence using economic theory and facts.

This method formulates principles using the sub-methods which are:

*Observations

*Experimentations

*Statistical methods.

Data is collected about a particular economic theory and then conclusions are drawn. The stages in this method includes:

* Observation

* Formulation of a hypothesis

* Generalizing principles

* Verifying against actual facts.

THE ADVANTAGES OF AN INDUCTIVE METHOD

* Since this method is based on facts it is more realistic.

* Using the statistical methods and experimentations makes the process more scientific, thus.

* Since the economic environment is dynamic,relying upon a more scientific method will always helps in reaching logical conclusions.

THE DISADVANTAGES OF AN INDUCTIVE

METHOD

* The data that is been used is insufficient and faulty it would lead to faulty conclusions, thereby making the hypothesis less reliable.

* It is a time-consuming process.

* The collection of all the data is not an easy job.

* It varies from person to person. As to how they collect the data.

Methods of Economic Analysis

DEDUCTIVE METHOD

INDUCTIVE METHOD

DEDUCTIVE METHOD:The deductive method is also called abstractive ,analytical and apriori method and represents an abstract approach to derivation of economic generalisation and theories .

THE STAGES IN DEDUCTIVE

a. Observation of a task or issues

b. Making the hypothesis

c. Testing the hypothesis using more observation etc.

ADVANTAGES OF DEDUCTIVE

a.It is simple method doesn’t involve the use of any complex software etc.

b.Only simple deductive logic is required

DISADVANTAGES OF DEDUCTIVE

a. The great demerit of deductive is that it highly sophisticated theoretical

2. INDUCTIVE METHOD:This deductive method is the type of reasoning that flows from Facts to theory ,first we collect information and facts and then move towards providing evidence using economic theory and facts

STAGES IN INDUCTIVE

a. Observation

b. Formulation of a hypothesis

c. Generalizing principles

d. Verifying against actual facts

ADVANTAGES OF INDUCTIVE

a. Since it us based on facts it is more realistic and reliable

DISADVANTAGES OF INDUCTIVE

a. It is a time consuming process

b. The collection of all the data is not an easy job and varies from person to person

METHODS OF ECONOMIC ANALYSIS

There are basically two methods of economic analysis

1. Deductive method

2. Inductive method

EXPLANATION

Deductive Method

The deductive Method is also called abstract, analytical or a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific.

The stages in deductive reasoning are:

Observation of a task/ issue

Making the hypothesis

Testing the hypothesis using more observations, etc.

This reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws.

Advantages of Deductive Method

It is a simple method, doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

Disadvantages of Deductive Method

In this method of reasoning we start from assumptions, thus, if the assumptions happen to be logically flawed the whole process becomes faulty and would give wrong conclusions. Thus, the logical fallacy is a disadvantage of this method.

Inductive Method

This type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method

formulates principles using the sub-methods- Observations, Experimentations, Statistical methods.

Data is collected about a particular economic theory and then conclusions are drawn.

The stages in this method are:

Observation

Formulation of a hypothesis

Generalizing principles

Verifying against actual facts.

Advantages of Inductive Method

Since it is based on facts it is more realistic and reliable.

Using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

Disadvantages of Inductive Method

If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

It is a time-consuming process and thus expensive as well.

The collection of all the data is not an easy job and varies from person to person as to how they collect data.

The methods used by economist analysis

1. Deduction Method

2. Inductive Method

DEDUCTION METHOD- methods used in deduction by economist are..

(a). Perception of the problem to be enquired into

(b). defining precisely the technical terms and Making appreciate assumptions, often called POSTULATES OR PREMISES

(c). deduction hypothesis, that’s deriving conclusions from the premises through the process of logical reasoning

(d). testing of hypothesis deducted

PERCEPTION OF THE PROBLEM TO BE ENQUIRED

The analyst must know the significant variables regarding whose behavior and interrelationships he wants to derive generalizations and must have a clear ideas of the problem to be enquired into.

THE TECHNICAL TERMS AND MAKING APPRECIATE ASSUMPTIONS

Assumptions may be behavioral pertaining to the behavior of the economic variables or they may be technological aspects relating to the state of technology and the factor endowment. the main assumptions that has been taken in economics is that consumers try to maximize there satisfaction and producers try to maximize their risk and maximize the expected rate of their profits. the crucial factor in building up a valid theory is whether it’s predictions are corroborated by the facts in the world. A correct scientific theory or generalizations must expressed in the form of a HYPOTHESIS that is conceivably refutable

DEDUCTION HYPOTHESIS THROUGH LOGICAL DEDUCTION.

A hypothesis describes relationship between factor affecting a phenomenon. it establishes the cause and effect. relationship between the variables having a bearing on the phenomenon through logical process.hypothesis is deduced from the assumption made. this logical reasoning may be carried out verbally or it may be conducted in symbolic terms using the language of what is known as SYMBOLIC LOGIC.

It is worthwhile to note that in deriving analytically sound hypothesis,one should guard against commiting logical fallacy in the process of logical deduction.egs. it is inappropriate to conclude that A must be the cause of B, if A happens to proceed B.

TESTING OR VERIFICATION OF HYPOTHESIS

This is the final stages l of deducting method used by economist.hypothesis obtained above have to be verified before they are established as generalizations or principles of economics.

for the verification of hypothesis economist cannot make controlled experiment because they have to discover uniformities in behavioral pattern of man.

INDUCTIVE METHOD- The inductive Method which is also called empirical methods derive economic generalization on the basic of experience and observations. detailed data are collected with regards to certain economics phenomenon and effort.

WAYS WHICH CAN BE USED FOR DERIVING ECONOMICS L AND THEORIES

a. Experimentation

b. Observations

c. Statistical or econometric methods

THE EXPERIMENTATION.

This is the use of contrived experiment is of limited applicability in economics. Experiments have been conducted to find out which law of production is valid, that is whether law of diminishing returns operates in the real world.

STEPS IN INDUCTIVE METHODS

Various steps are gone through in developing economics theories through inductive Method

a. In the deductive approach is to identify the problem

b. Defining technical terms and variables related to problem.

c. Collection of data

d. processing of data collected and finding out what relations between the variables actually hold good

Economic Analysis

We have two methods of economic analysis

1.) Deductive method

2.) Inductive method

Deductive method is starting with undisputed fundamental facts and after adding some assumptions it builds up into a theory. It is also called Hypothesis.

Inductive method is based on experiences and observations to derive economic generalizations. This type of reasoning flows from facts to theory. First, we collect information and facts and then move toward providing evidence using economic theory and facts.

An economic theory derives laws or generalizations through two methods:

(1) Deductive Method and (2) Inductive Method.

These two ways of deriving economic generalizations are now explained in brief:

(1) Deductive Method of Economic Analysis:

The deductive method is also named as analytical, abstract or prior method. The deductive method consists in deriving conclusions from general truths, takes few general principles and applies them draw conclusions.

For instance, if we accept the general proposition that man is entirely motivated by self-interest. In applying the deductive method of economic analysis, we proceed from general to particular.

The classical and neo-classical school of economists notably, Ricardo, Senior, Cairnes, J.S. Mill, Malthus, Marshall, Pigou, applied the deductive method in their economic investigations.

Steps of Deductive Method:

The main steps involved in deductive logic are as under:

(i) Perception of the problem to be inquired into: In the process of deriving economic generalizations, the analyst must have a clear and precise idea of the problem to be inquired into.

(ii) Defining of terms: The next step in this direction is to define clearly the technical terms used analysis. Further, assumptions made for a theory should also be precise

(iii) Deducing hypothesis from the assumptions: The third step in deriving generalizations is deducing hypothesis from the assumptions taken.

(iv) Testing of hypothesis: Before establishing laws or generalizations, hypothesis should be verified through direct observations of events in the rear world and through statistical methods. (Their inverse relationship between price and quantity demanded of a good is a well established generalization)

(2) Inductive method of Economic Analysis:method which also called empirical method was adopted by the “Historical School of Economists”. It involves the process of reasoning from particular facts to general principle.

This method derives economic generalizations on the basis of (i) Experimentations (ii) Observations and (iii) Statistical methods.

In this method, data is collected about a certain economic phenomenon. These are systematically arranged and the general conclusions are drawn from them.

For example, we observe 200 persons in the market. We find that nearly 195 persons buy from the cheapest shops, Out of the 5 which remains, 4 persons buy local products even at higher rate just to patronize their own products, while the fifth is a fool. From this observation, we can easily draw conclusions that people like to buy from a cheaper shop unless they are guided by patriotism or they are devoid of commonsense.

Steps of Inductive Method:

The main steps involved in the application of inductive method are:

(i) Observation.

(ii) Formation of hypothesis

(iii) Generalization.

(iv) Verification.

The basic economic method are

(1) Deductive and Inductive method

DEDUCTIVE METHOD

In this kind of method, we go from general to specific. The stages in deductive reasoning are:

Observation of a taskThis reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws.

Making the hypothesis

Testing the hypothesis using more observations, etc.

ADVANTAGE OF DEDUCTIVE METHOD

It is a simple method, doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

DISADVANTAGES OF DEDUCTIVE METHOD

In this method of reasoning we start from assumptions, thus, if the assumptions happen to be logically flawed the whole process becomes faulty and would give wrong conclusions. Thus, the logical fallacy is a disadvantage of this method.

INDUCTIVE METHOD

This type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods. Data is collected about a particular economic theory and then conclusions are drawn. The stages in this method are:

Observation

Formulation of a hypothesis

Generalizing principles

Verifying against actual facts.

ADVANTAGES OF INDUCTIVE METHOD

Since it is based on facts it is more realistic and reliable.

Using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

DEMERIT OF INDUCTIVE METHOD

(1)If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

(2)it is a time-consuming process and thus expensive as well.

The collection of all the data is not an easy job and varies from person to person. As to how they collect data.

Obi Francisca Nwamaka

Faculty of Education

Department of Social Science Education

ECO 101- PRINCIPLE OF ECONOMICS

25/08/2021

What are the basic methods analyses used by the Economists?This reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws.

In this method of reasoning we start from assumptions, thus, if the assumptions happen to be logically flawed the whole process becomes faulty and would give wrong conclusions. Thus, the logical fallacy is a disadvantage of this method.

Any economic analysis involves the formulation of laws and generalizations through two methods-

1. Deductive Method

2. Inductive Method

– Briefly and convincingly discuss each of them

Deductive Method

This is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions (build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific.

The stages in deductive reasoning are:

• Observation of a task/ issue

• Making the hypothesis

• Testing the hypothesis using more observations, etc.

Advantages of Deductive Method

• It is a simple method, doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

• This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

Disadvantages of Deductive Method

Inductive MethodThis type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods.

Data is collected about a particular economic theory and then conclusions are drawn. The stages in this method are:

• Observation

• Formulation of a hypothesis

• Generalizing principles

• Verifying against actual facts.

Advantages of Inductive Method

• Since it is based on facts it is more realistic and reliable.

• Using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

• Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

Disadvantages of Inductive Method

• If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

• It is a time-consuming process and thus expensive as well.

• The collection of all the data is not an easy job and varies from person to person. As to how they collect data.

Name:Ossai Benita Toochukwu

Reg no:2019/245534

Dept:Pure and Industrial Chemistry

Email:ossaibenita@gmail.com

METHODS OF ECONOMIC ANALYSIS

The generalisations of economics like the laws of other sciences, state cause and effect relationships between variables and describe those economic hypotheses which have been found consistent with facts or, in other words, have been found to be true by empirical evidence. But a distinction may be drawn between a generalisation (law) and a theory.

Some of the most important methods of economic analysis are as follows: 1. Deductive Method 2. Inductive Method

Deductive method:Deduction Means reasoning or inference from the general to the particular or from the universal to the individual. The deductive method derives new conclusions from fundamental assumptions or from truth established by other methods. It involves the process of reasoning from certain laws or principles, which are assumed to be true, to the analysis of facts.

Then inferences are drawn which are verified against observed facts. Bacon described deduction as a “descending process” in which we proceed from a general principle to its consequences. Mill characterised it as a priori method, while others called it abstract and analytical.

Deduction involves four steps: (1) Selecting the problem. (2) The formulation of assumptions on the basis of which the problem is to be explored. (3) The formulation of hypothesis through the process of logical reasoning whereby inferences are drawn. (4) Verifying the hypothesis.

Inductive method:The inductive method which is also called empirical method derives economic generalisations on the basis of experience and observations. In this method detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalisations which follow from the observations collected.

But, it is worth mentioning that the number of observations has to be large if it can yield a valid economic generalisation. One should not generalise on the basis of a very few observations. There are three ways which can be used for deriving economic principles and theories.

They are:(a) Experimentation,(b) observations,(c) statistical or econometric method.

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Eco 101 assignment

There are two major methods used by economists to carry out economic analysis. These involves a series of clear observations, analysis and critical thinking which will be explained below. These include the Deductive and Inductive methods respectively.

1. Deductive method: The deductive method is also called abstract, analytical and a prior method and represents an abstract approach to the derivation of economic generalizations and theories.

The principal steps in the process of deriving economic generalizations through deductive steps are:

a. Perception of the problem: In any scientific enquiry, the analyst or theorist must have a clear idea of the problem to be enquired into. There is always the need to set a significant variables regarding whose behavior and interrelationship will need to derive such generalizations. He must identity a certain problem and diligently derive a suitable generalizations from already observed phenomenon.

b. Definition of technical terms and making of assumptions: This is also an important step in the process of deriving economic generalizations is to define precisely and unambiguously the various technical terms to be used in the analysis well as to state clearly the assumptions he wants to derive generalizations.

c. Deducing hypotheses through logical deduction: It is imperative in this step to derive generalizations through deductive logic is deducing hypotheses from the assumptions or premises taken.

d. Testing or verification of hypotheses: Hypotheses obtained above have to be verified before they are established as generalizations or principles of economics. For the verification of hypotheses, economists cannot make controlled experiments, because they have to discover uniformities in behavior patterns of man.

2. Inductive method: The inductive method which is also called empirical method derives economic generalizations on the basis of experience and observations. This method involves the establishment and collection of clear data with regard to a certain economic phenomenon and effort is then made to arrive at certain generalizations which follow from the observations collected. It is worthy of note that the number of observations has to be large if it can yield a valid economic generalizations. This also entails a clear and detailed observations and collection of data before any generalization is made.

The simple strategies of monetary analysis used by economists are the Deductive technique and the Inductive method. Economic

generalizations describe the laws or statements of tendencies in numerous branches of economics, along with production, intake, alternate, and distribution of income. In the view of Robbins, economic generalizations or legal guidelines are statements of uniformity which describe human conduct within the allocation of scarce resources between alternative ends.

The generalizations of economics like the laws of different sciences, kingdoms, cause and impact relationships between variables and describe those financial hypotheses which have been found consistent with records or, in other words, have been located to be true by using empirical evidence. But a distinction may be drawn between a generalization (regulation) and a concept.

1. Deductive method of monetary evaluation:

The deductive approach is also called the abstract, analytical, and a priori approach, and represents a summary method for the derivation of financial generalizations and theories.

The essential steps in the manner of deriving financial generalizations through deductive common sense are:

(a) belief of the problem:

In any scientific enquiry, the analyst or theorist has to have a clean idea of the problem to be enquired into. He must recognise the enormous variables concerning whose conduct and relationships he wants to derive generalizations. The notion of trouble is by no means an easy task.

(b) Definition of Technical terms and Making of Assumptions:

The next step within the system of deriving economic generalizations is to outline exactly and unambiguously the various technical phrases for use within the evaluation, in addition to the country without doubt, the assumptions he makes to derive generalizations.

Assumptions may be behavioral, referring to the behavior of the monetary variables, or they may be technological, referring to the kingdom of generation and the issue of endowments. The crucial assumptions are made on the basis of observations or introspection.

(c) Deducing Hypotheses via Logical Deduction:

The next step in deriving generalizations through deductive logic is deducing hypotheses from the assumptions or premises taken. A hypothesis describes dating between elements affecting a phenomenon; it establishes the motive and effect of dating among the variables having a bearing on the phenomenon.

Then, through logical technique, a hypothesis is deduced from the assumptions made. This logical reasoning may be accomplished verbally or it is able to be carried out in symbolic phrases through the usage of what’s known as symbolic logic.

The geometric or picture technique is likewise typically hired to deduce hypotheses about the connection between elements. Except, the procedure of logical deduction can be completed with the help of greater formal mathematics.

(d) testing or Verification of Hypotheses:

Hypotheses acquired above need to be demonstrated earlier than they may be set up as generalizations or principles of economics. For the verification of hypotheses, economists can not conduct controlled experiments due to the fact that they should find out the uniformities in the conduct styles of men.

We can’t do experiments with guys below managed conditions, consisting of in laboratories, as physical scientists do experiments with inanimate gadgets of nature and biologists do those with animals and vegetation. Consequently, economists have to depend on uncontrolled experience and observations.

The statistics regarding uncontrolled enjoyment of the behavior styles regarding variables about man and the economic system are quite amply available. The reliance by economists on uncontrolled experiences, however, does increase the wide variety of observations required to verify the hypotheses or to establish the generalizations.

deserves and merits of deductive technique:

With the aid of rigorous mathematical judgment, monetary theories can be developed through the system of deduction, which can correctly provide an explanation for economic phenomena. Secondly, via deductive logic, useful monetary theories can be derived without the tenuous and distinct collection and analysis of data which might be required underneath the inductive technique. Therefore

, in comparison to inductive techniques, deduction is much less time-ingesting and less expensive. Thirdly, in view of the restricted scope for managed experimentation in economics, the approach of deduction is an extremely useful technique for building economic theories. This is due to the fact that several forces act simultaneously on an economic phenomenon and it isn’t viable to remove a number of these with the aid of a managed experiment.

This suggests the vital significance of deductive good judgment for building up monetary principles or theories. Fourthly, the usage of sophisticated mathematical techniques within the deductive approach permits economists to introduce accuracy and exactness into economic standards and theories. Regardless

of the above-cited merits, the shortcomings of the deductive approach should now not be unnoticed. The usage of the deductive method in deriving financial generalizations requires using a high-level competence in logic and theoretical abstraction. Similarly

, a great demerit of the deductive technique is that with it, highly state-of-the-art theoretical models based totally on surprisingly unrealistic assumptions may be evolved which do not have any operational importance. Indeed, such highly beside the point analytical fashions with little empirical content and incapable of being used for coverage systems have in truth been evolved by economists. Such fashions are not any more than mere “highbrow toys”. If economics is to function as a device for social betterment, the building of such theoretical fashions having no operational use ought to be averted. Finally

, in the derivation of financial hypotheses and conclusions via deductive common sense, assumptions play a vital function. If the assumptions made are such that when on doing away with them, economic speculation based totally on them is refuted, then the making of these assumptions isn’t legitimate. Hence

, a person who uses a deductive approach should usually keep in mind to what extent the validity of generalizations derived depends on the assumptions made. As an instance, Keynesian macroeconomic analysis is based totally upon the assumption of a melancholy-ridden capitalist financial system with a variety of excess effective capabilities. Consequently

, a fine harm has been done in making use of the Keynesian theories in the context of growing countries like ours in which the assumptions made by using Keynes do no longer hold good. Consequently, mere “deductive arm-chair evaluation” should be avoided, if the clinical persona of economics is to be maintained.

2. Inductive method of economic analysis

The inductive technique, which is also called the empirical approach, derives economic generalizations on the basis of experience and observations. In this technique, precise facts are collected in regards to a positive economic phenomenon and effort is then made to arrive at sure generalizations which follow from the observations accumulated. However

, it’s really worth citing that the variety of observations has to be huge if it may yield a valid economic generalization. One must not generalize on the premise of a few observations. There are three approaches which may be used for deriving financial principles and theories.

(a) Experimentation,

(b) observations,

(c) statistical or econometric methods.

As has been cited above, experimentation, that is, the use of contrived experiments, is of restrained applicability in economics. First, in contrast to natural sciences, which can be concerned with studying the behavior of both inanimate objects or obedient animals, inclusive of rats and rabbits under the influence of chloroform, economics deals with the behavior of man, who’s quite fickle, wayward, and unmanageable. Except

, man can not tolerate the idea of being experimented upon, either individually or collectively. Secondly, a monetary phenomenon is the result of a multiplicity of factors and reasons performing and interacting with each other. Consequently

, financial phenomena no longer repeat themselves within an equal uniform pattern. Numerous elements appearing in a monetary phenomenon ‘disturb’ it and make its precise repetition unlikely. For that reason, compared with herbal phenomena, financial phenomena are less uniform in pattern, much less repetitive and more variable.

Thirdly, economists study the financial phenomena wherein corporations, along with employees’ associations, alternate unions, farming, political events with their distinctive ideologies, and sports make it tough to conduct controlled experiments in the economic world. However, in spite of those problems, experimental methods can be utilized in some fields. As

an example, experiments have been conducted to find out which regulation of production is valid. That is, whether or not regulation of diminishing returns, the law of consistent returns, or regulation of increasing returns operate within the real international. Except, public undertakings or massive commercial corporations often attempt to check the impact of the adjustments on the fees on their products at the call for it and accordingly find out the call for elasticity of their merchandise.

various Steps in the Inductive method: Diverse

steps are gone through in growing monetary theories through an inductive approach. Step one, as in the deductive technique, is to perceive the problem. The second step is defining technical phrases and variables associated with the trouble. It

is the next step that is unusual for the inductive approach, particularly, the gathering of facts about the variables related to the trouble and doing some preliminary consideration of the viable practical relationships between the applicable variables. The

following important step in the production of monetary theories in this approach is the processing of statistics collected and locating out what family members between the variables surely maintain good. From this, a principle was developed which can be subtle and examined through statistical methods. As

soon as the idea has evolved, you may make predictions on its foundation, as is executed in the deductive technique. If predictions of concepts are in settlement with the facts and actual behavior of the economy, then a new dependable theory has evolved. If a brand new idea explains “how matters work” better than the prevailing ones, it replaces them.

assessment of Inductive technique:

As has been explained above, observations of information through series of specific records and the usage of statistical methods to arrive at monetary generalizations setting up relationships between facts are being increasingly made. A

number of recent research in the area of macroeconomics, consisting of the nature of intake feature describing the relationship between income and consumption, and the principle of acceleration describing the factors which determine investment within the economic system, have been acquired via the use of an inductive approach.

The inductive approach has some other issues in that there is a high-quality risk of conclusions being drawn from inadequate statistics. To achieve generalizations via inductive technique, one must take care that a sufficient number of observations or statistics have been taken under consideration. Except

, the gathering of information itself is likewise no longer a clean venture. And a researcher who desires to use the inductive method to arrive at generalizations must have proper information about statistical techniques. That is, he should understand the art of accumulating, processing, and interpreting records. It’s apparent that compared with the deductive technique, the inductive approach is time-eating and expensive.

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Methods of Economic Analysis

Any economic analysis involves the formulation of laws and generalizations through two methods- deductive and inductive.

Methods of Economic Analysis

Deductive MethodThis is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

Observation of a task/ issueThis reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws.

Making the hypothesis

Testing the hypothesis using more observations, etc.

Advantages of Deductive MethodIt is a simple method, doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

Disadvantages of Deductive Method;In this method of reasoning we start from assumptions, thus, if the assumptions happen to be logically flawed the whole process becomes faulty and would give wrong conclusions. Thus, the logical fallacy is a disadvantage of this method.

Observation

Formulation of a hypothesis

Generalizing principles

Verifying against actual facts.

Advantages of Inductive Method;Using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

Since it is based on facts it is more realistic and reliable.

Disadvantages of Inductive Method;

If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

It is a time-consuming process and thus expensive as well.

The collection of all the data is not an easy job and varies from person to person. As to how they collect data.

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The basic methods of analysis used by economists are:

1. DEDUCTIVE METHOD

2. INDUCTIVE METHOD

1. Deductive method which is also called a priori reasoning starts from unchallenged elementary or rudimentary assumptions or facts and then arrives at conclusions. It builds a hypothesis or theory using logical analysis or their own analytical abilities. In this kind of reasoning, economists start from general to specific.

Economists have different stages in deductive reasoning.

They includes;

Observation of task / issue; making the hypothesis; treating the hypothesis using more observation. This reasoning gives economists a hypothesis and if this hypothesis gets verified, they generate economic principles or laws.

Moreover, deductive method is a simple method, it does not involve the use of any complex software analysis. It only required simple deductive logic.

Again, deductive method is important for economists as it focuses upon economic reasoning which is of paramount importance.

2. Inductive method: inductive method is the type of reasoning that flows from fact to theory. In the first place, economists collect information and facts then move towards providing evidence using economic theory and facts.

This method formulates principles using the sub-methods-observation, experimentations, and statistical methods. Data is collected about a particular economic theory and then conclusions are drawn.

Stages in this Method Includes:

Observation, formulation of a hypothesis, generalizing principles, and verifying against actual facts

In addition, since inductive method is based on facts, it is more realistic and reliable.

Again using statistical methods and experimentations makes the process more acceptable universally rather than just depending on your own reasoning and logic.

Finally, since the economic environment is dynamic and always changing, relying open a more scientific method always help reach logical conclusions.

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Methods of Economic Analysis

1. DEDUCTIVE METHOD: deductive also known as abstract or priori method which required abstract approach to the derivation of Economic generalisation and theories.The steps include

A. Perception of the problem: the theorist must have the clear knowledge of the two variables he want derive his generalisation from.

B. Define your postulates: finding the relationship between the two variables and why you think the two variables are related based on your own assumptions and observation.

C. Hypothesis: predicting the possible factors that may affect the relationship between the two variables.

D.Testing the hypothesis: verifying if the factors that are assumed to affect the relationship between the two variables are factual in nature before it is generally accepted.

2. INDUCTIVE METHOD: inductive method also known as empirical method which requires collecting many observation on a particular data using statistical method to conclude whether it is consistent with actual fact or not.Generally It requires Econometric packages to run this method.

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Assignment: what are the basic methods of analysis used by economists? Briefly and convincingly discuss each of them.

ANSWER;

The two basic method of economic analysis are namely; deductive and inductive methods of economic analysis.

* Deductive Method:

The deductive Method of economic analysis is a method which is analytical and abstract in its approach at arriving at a generalization, abstract in a way that mainly it works enough with logical reasoning, ideas and observations. For one to conduct a deductive analysis to derive an economic generalization, he/she has to honour these process, which are ; firstly, the economist should be able to significantly understand and identify the problem and it’s behavioural variables to work on and bring a solution to. Secondly, he or she has to make assumptions from a proper observation and also clearly define or breakdown the technical terms to be used, all to simplify the process of the analysis. Thirdly, the economist has to logically deduce hypothetical description from the assumptions made, the hypothesis could be description on relationships between factors affecting a phenomenon, however in the process of this logical deduction of hypothesis, one could be advised to use the mathematical means than the geometric means to avoid committing a logical fallacy. This is advices because mathematical means is more exact while geometric is complicated in it means and results.

Then lastly is the testing or verification of the deduced hypothesis. In the verification of hypothesis to derive a generalization, it is understood that due to absence of controlled experiments like the physical scientists do, Economists have to rely on uncontrolled experiences, personally engage in an increased number of direct observation of real events, engage in a careful interpretation of facts and economic data gathered, gathering of comparatively unprocessed materials such as files of business firms, market and locally published reports, government departments and its like, to establish a generalization. However, a contemporary way or method of testing hypothesis has been devices and has proven very useful and meritorious because it makes it possible to obtain more precisely, the degree of relationship between economic variables. This modern method, is termed statistical it econometric method, but then this method must be preceded by logically developed theories before it could be used.

* Inductive Method:

The inductive Method has some similarities with deductive Method in its process of analysis and derivation of an economic generalization, but distinguishes it from deductive Method is its empirical or statistical method of testing data or information gathered. In the steps followed to analyze and develop theories through inductive means, just like deductive, firstly is to identify the problem, after which the economist is to define the technical terms and variables related to the problem.

The next step is collection of data about variables and the possible functional relationship between relevant variables and this could be aided by preceded reasoning or thinking. After that is making or construction of a theory by evaluating and processing data collected and ascertaining how valid relationships between variables are. When theories has been constructed, prediction are to be made on its basis, when the predictions of the theory come in agreement with the facts and the behaviour of the economy, then a new theory is born, but if otherwise then a new theory with a better explanation has to take the place of the existing one, so to analyze and derive generalization or theories through inductive means, demands it requires number of observations, statistical collection and interpretation of data to achieve.

In conclusion, both method are not competitive rather complimentary in the process of economy analysation and derivation of generalization and theories.

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METHOD OF ECONOMICS ANALYSIS

1 DEDUCTIVE REASONING:Deductive reasoning is the process of drawing a conclusion based on premises that are generally assumed to be true. Also called “deductive logic,” this act uses a logical premise to reach a logical conclusion. Deductive reasoning is often referred to as “top-down reasoning.” If something is assumed to be true and another thing relates to the first assumption, then the original truth must also hold true for the second thing.

E.g if a car’s trunk is large and a bike does not fit into the trunk, then you may assume the bike must also be large

INDUCTIVE REASONING:Inductive reasoning is a method of logical thinking that combines observations with experiential information to reach a conclusion. When you can look at a specific set of data and form general conclusions based on existing knowledge from past experiences, you are using inductive reasoning.

Example, if you review the population information of a city for the past 15 years, you may observe that the population has increased at a consistent rate. If you want to predict what the population will be in five years, you can use the evidence or information you have to make an estimate.

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TWO WAY OF ECONOMIC ANALYSISThis is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

1.Deductive Method

Making the hypothesis

Testing the hypothesis using more observations, etc.

Advantages of Deductive MethodIt is a simple method, doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

Disadvantages of Deductive Method

(2) INDUCTIVE METHOD: This type of reasoning flows from fact you theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods observation,experimental, statisitical methods.

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The basic method of economics analysis used by economists are mainly two which are:

(a) Inductive method

(b) Deductive method

(a)Inductive method: it involves the process of reasoning from particular facts to forming a general principle i.e begins with particular observations and moves to general explanations. Inductive method process can be illustrated as thus :

Observation of the issue——->Formulation of hypothesis——->Generalizing principles——–>Verifying principle against actual fact.

(b)Deductive method: It involves the process of reasoning from general principles to a particular fact. It derives new conclusion from existing general theories/principles. Deductive method process can be illustrated as thus:

Observe an existing theory——-> Formulate hypothesis based on existing theory——-> collect data to verify the hypothesis——-> analyse if the collected data supports the hypothesis.

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THE METHODS OF ECONOMIC ANALYSIS USED BY ECONOMIST

knowing that inductive and deductive methods are not just methods of economic analysis but are generalization in economics is going to help us understand that, they are the main economic method of analysis that economist use in their economic research.

DEDUCTIVE METHOD

This method is also called abstract, analytical prior method(knowledge that comes from the power of reasoning based on self evident truth) and represents an abstract approach to the derivation of economic generalization and theories. this method involves proper reasoning from one or more statements. for deductive method to be sound, the hypothesis must be correct.

example: all men are mortals, Desmond is a man-[true]

Principle steps in the process of deriving economic generalization through deductive logic are:

A) Perception of the problem: this is not an easy step in the deductive method because if illusion and hallucination are possible, then perceptual experience, as we ordinarily understand it, is impossible. In any scientific inquiry, the analyst must have a clear idea of the problem to be inquired into. He must know the significant variables regarding whose behavior and interrelationship he wants to derive generalization. The perception of the problem is by no means an easy task.

B)Definition of technical terms and making of assumptions( Postulates or premises): here the economist makes assumptions or suggests the existence, facts, or truth of the problem as basis of reasoning. Assumptions could be behavioral pertaining to the behavior of the economic variable or technological relating to the state of technology and the factor endowments.

C) Deducing hypotheses through logical deduction: a hypothesis describes relationships between factors affecting a phenomenon; it establishes the cause and effect relationship between the variables having a bearing on the phenomenon.

Then, through logical process, hypotheses is deduced from the assumptions made. this logical reasoning could be carried out verbally or it maybe conducted in symbolic terms using the language of what is known as symbolic logic.

D) Testing or verification of hypotheses: hypotheses gotten must be tested or verified before they are established as principles of economics. For this verification, there are no controlled experiments, because economist have to discover uniformities in the behavioral patterns of man.

INDUCTIVE METHOD

This method could also be called empirical method. It derives economic generalization on the basis of experience and observations.In this method, detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalization which follows from the observations collected

.

Below are the Answers….

Deductive Method:

In this method, We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific.

The stages in deductive reasoning are:

Observation of a task/ issueThis reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws.

It is a simple method, doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

Making the hypothesis

Testing the hypothesis using more observations, etc.

Advantages of Deductive Method

Disadvantages of Deductive Method

Deductive And Inductive Methods

Inductive MethodThis type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods.

Data is collected about a particular economic theory and then conclusions are drawn. The stages in this method are:

ObservationUsing statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

Formulation of a hypothesis

Generalizing principles

Verifying against actual facts.

Advantages of Inductive Method

Since it is based on facts it is more realistic and reliable.

Disadvantages of Inductive Method.

It is a time-consuming process and thus expensive as well…

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INDUCTIVE METHOD

In this method data are collected with regard to certain economic phenomenon and effort is made to arrive at certain generalization on the basis of experience and observation.

DEDUCTIVE METHOD

Deductive method is also called abstract, analytical and a priori method represents an abstract approach to the derivation of economic generalizations and theories. It organizes the problem to be inquired into. It also defines the technical terms and makes good assumption which is often called postulates or premises.

Two Methods of Economic Analysis

Economic Analysis is defined as the assessing or examining topics or issues from an economist’s perspective. Economic analysis is the study of economic systems.

The analysis aims to determine how effectively the economy or something within it is operating. Economic analyses factor in the opportunity costs that people or companies employ. They measure, in monetary terms, what the benefits of a project are to the economy or community.

The two methods include deductive analysis and inductive analysis

1. Deductive Analysis

It is also called abstract, analytical and a priori method and represents an abstract approach to the derivation of economic generalisations and theories.

The principal steps in the process of deriving economic generalisations through deductive logic are; Perception of the problem to be enquired into, defining precisely the technical terms and making appropriate assumptions, often called postulates or premises, deducing hypotheses, that is, deriving conclusions from the premises through the process of logical reasoning; and testing of hypothesis deduced.

2. Inductive Analysis

The inductive method which is also called empirical method derives economic generalisations on the basis of experience and observations. In this method detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalisations which follow from the observations collected.

The Various Steps in Inductive Method

a. Identifying the problem

b. Data collection and some preliminary thinking

c. Data processing to find out how they are related

d. Make predictions and test them

e. Predictions are in agreement with facts.

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There are two major methods used by economists in analysing Economic situations, they include:

1. Deductive Method of Economic Analysis

Deductive method is known as the analytical, abstract or priori method. It starts with certain formal data and assumptions. Then by logical reasoning certain conclusions are made. It is with these undisputed fundamental facts and after adding some assumptions that theories are arrived at. For instance, it is assumed that businessmen aim at achieving maximum profit. It follows from this that businessmen buy the materials at the cheapest market and sell it in the most costly market.

In Deductive method of Economic Analysis we proceed from the general to the particular. This is also known as a hypothetical method because some of the assumptions may not correspond with actual facts, but very near actual facts are to be used as a premise for starting, reasoning and drawing conclusions.

A complete form of deductive method consists of three stages,

i. Observation ot perception of the problem;

ii. Making assumptions from logical reasoning

iii. Formulation of hypothesis, and

iv. Testing the hypothesis

Deductive reasoning provides us with hypotheses or generalizations. If the hypotheses are tested and verified with relevance to facts, they become valid economic laws.

Advantages of Deductive Method of Economic Analysis

1. Deductive method is exceedingly simple.

2. Deductive method obviates the necessity of experimentation. Economics being a social science, experimentation may not be available as in the case of physics or chemistry. So, the next best alternative to experiment is deductive reasoning.

3. The deductive method results in accuracy and exactness in generalization, because of logical reasoning. This method gives a high standard of precision in abstract economic reasoning.

Disadvantages of Deductive Method of Economic Analysis

Deductive method has its drawbacks also:

1. Deduction is based mainly on assumptions which are perfectly valid but If assumptions are wrong, generalizations made on the basis of wrong assumptions will be imperfect and invalid.

2. In deduction there is too much of abstraction and economists by means of their intellectual exercises produce only “intellectual toys” which have little connection with reality.

3. Deductive generalizations started on wrong premises will be dangerous when such generalization claim universal validity. For instance, if such faulty generalizations are made use of in framing government policies, the results would be nothing but disastrous.

Inductive Method of Economic Analysis

In this method, economists proceed from a practical angle to problems of science to reduce the gap between theory and practice. Induction is done by two forms, viz. experimentation and statistical form. Facts are collected first, then arranged and conclusions are drawn. Then these general conclusions are further verified with reference to actual facts.

The inductive method is generally associated with the statistical form of inductions. The statistical approach has a larger field in economic investigations than the method of experimentation. Further, the method of statistical induction is indispensable for the formulation of economic policy. Practically, Malthus presented his famous theory of population only after studying the facts of population in various countries; He then used statistics to support his theory. .

Advantages of Inductive Method of Economic Analysis

Inductive method has the following merits:

1. It is highly practical and realistic as it describes things as they are.

2. It is helpful in verifying the conclusions of the deductive method.

Disadvantages of Inductive Method of Economic Analysis

Inductive method has the following limitations:

1. When the investigators lack a balanced judgement there is the risk of drawing hurried conclusions based on inadequate information or data.

2. Collection of data in the inductive process is highly complex and time consuming.

3. Only induction alone will not deliver unless it is complemented by means of deductive reasoning. Without deduction, the inductive method would result in producing only a mass of unrelated and unconnected facts.

In conclusion, the two methods have to be made use of or combined to achieve the required objective. The two methods, deductive and inductive, are not competitive, but complementary in helping the investigator.

NAME: ONYEMA JANET NNEOMA

REG NUMBER: 21313973GA

MATRICULATION NUMBER: 2020/242640

DEPARTMENT: ECONOMICS

THE METHODS OF ECONOMIC ANALYSIS ARE:

1. DEDUCTIVE METHOD

The deductive method derives new conclusions from fundamental assumptions or from truth established by other methods. It observes the process of reasoning from certain laws or principles, which are assumed to be true, to the analysis of facts, then references are drawn which are verified against facts. This is also known as hypothetical method for some of the assumptions may not correspond to actual facts.

The principle steps in the process of deriving economic generalizations through deductive logic are:

A.Perception of the problem to be inquired into;

B. Defining precisely the technical terms and making appropriate assumptions, often called postulates or premises;

C. Deducing hypotheses, that is, deriving conclusions from the premises through the process of logic reasoning; and

D. Testing of hypothesis deduced

2. INDUCTIVE METHOD

The inductive method involves the process of reasoning from particular facts to general principles. In this method, data is collected about a certain economic phenomenon. These are systematically arranged and the general conclusions are drawn from them.. An example of inductive logic is “the coin i pulled from the bag is a penny…. therefore all coins in the bag are pennies”. Even if all the premises are true in a statement, inductive reasoning allows for the conclusion to be false.

Name: Uzodigwe Isabel Chiemerie

Department: Nursing/Nursing sciences

Regno.: 20636611ff

Faculty: Health sciences and technology.

The methods of economics analysis are: Deductive method and Inductive method.

Deductive method: In this deductive method of economics analysis we proceed from the general to the particular.

This is also known as an hypothetical method for some of the assumptions may not correspond to the actual facts but very near the actual facts which may be used as premise for starting reasoning and drawing conclusions. Deductive method involves reasoning and a few fundamental propositions.

Inductive method: In this Inductive method of economics analysis, economists proceed from a practical angle to problems of science to reduce the difference between theory and practice. Induction is done by two forms:

Experimental and Statistical form.

In this method facts are collected first, arranged and conclusions are drawn.

NAME: Okoh Chibueze Joshua

REG NUMBER:21468870EF

DEPARTMENT: ECONOMICS

COURSE CODE: ECO 101

COURSE TITLE: PRINCIPLES OF ECONOMICS

METHODS OF ECONOMIC ANALYSIS

1. DEDUCTIVE METHOD: This is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

1 Observation of a task/ issue

2 Making the hypothesis

3Testing the hypothesis using more observations, etc.

2.INDUCTIVE METHOD: This type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods.

NAME:UCHEAGA BLESSING CHISOM

DEPARTMENT:PURE AND INDUSTRIAL CHEMISTRY

REG No:2019/248163

FACULTY:PHYSICAL SCIENCE

What are the basic methods of analysis used by Economists?

The economic analysis involves the formulation of laws and generalizations through two methods namely:

Deductive and Inductive.

DEDUCTIVE METHOD

This is method can also be referred to as a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we have to go from general to specific.

The stages in deductive reasoning are:

* Observation of a task/ issue

* Making the hypothesis

* Testing the hypothesis using more observations, etc.

This reasoning actually gives us a hypothesis and if this hypothesis gets verified we will get a general economic principles or laws.

Moreover just as every thing has an advantage and disadvantage, so also those this method.

ADVANTAGES OF A DEDUCTIVE

METHOD

* It is a simple method, which doesn’t involve the use of any complex software analysis, etc.

* only a simple deductive logic is required.

* This method is really important for economists as it focuses upon economic reasoning which is of paramount importance.

DISADVANTAGES OF AN DEDUCTIVE

METHOD

In this method of reasoning we have to start from assumptions, thus, if the assumptions happen to be logically flawed then the whole process becomes faulty and would lead to wrong conclusions.

Thus, the logical fallacy is a disadvantage of this method.

INDUCTIVE METHOD

This kind of reasoning flows from facts to theory. First, we have to collect informations and facts and then move towards providing evidence using economic theory and facts.

This method formulates principles using the sub-methods:

*Observations

*Experimentations

*Statistical methods.

Data is as well collected about a particular economic theory and then conclusions are drawn. The stages in this method are:

* Observation

* Formulation of a hypothesis

* Generalizing principles

* Verifying against actual facts.

ADVANTAGES OF AN INDUCTIVE

METHOD

* Since this method is based on facts it is more realistic and reliable.

* Using the statistical methods and experimentations makes the process more scientific, thus, it is more acceptable universally rather than just depending on your own reasoning and logic.

* Since the economic environment is dynamic and always changing, relying upon a more scientific method will always helps in reaching logical conclusions.

DISADVANTAGES OF AN INDUCTIVE

METHOD

* If the data that is been used is insufficient and faulty it would lead to faulty conclusions, thereby making the hypothesis less reliable.

* It is a time-consuming process and thus really expensive as well.

* The collection of all the data is not an easy job and it varies from person to person. As to how they collect the data.

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inductive or deductive approaches

inductive or deductive approaches

Approaches to data analysis are important in that they offer a theoretical orientation to practice. Three particular types of approach are often highlighted in the literature:

Induction: this is the process by which we draw a general conclusion from individual instances or observations. The benefits of an inductive approach, as seen for example in grounded theory, are that it allows flexibility, attends closely to context and supports the generation of new theory [see the paper on social loss as example]. To its critics, however, inductive research painstakingly works from first principles when there is no overriding need to do so given there is already a huge amount of existing literature.

Deduction: The deductive method seeks to draw valid conclusions from initial premises. It follows the logic of syllogy expressed in classical form as:

Socrates is a man (major premise )

All men are mortal (minor premise )

Therefore Socrates is mortal (conclusion)

Deduction as an approach to social research has had considerable appeal, and has been most clearly associated with a kind of classical and logical positivism. In its purest form deductive logic has been associated with the hypothetico-deductive approach. This involves generating formulating quite specific hypotheses about phenomena generally on the basis of existing practical and theoretical knowledge. The hypothesis is then tested under experimental conditions. If the data support the hypothesis then the hypothesis can be said to hold in this context; if not, then assuming that the research was well designed and carried out rigorously, the hypothesis, and the theory underlying the hypothesis, is challenged or at least the limits of the theory may have been reached.

The hypothetico-deductive approach is most associated with ‘the scientific method’ but also underpins desk based research such as large N studies, meta analysis and systematic reviews. While powerful, deductive logic is criticised as misrepresenting the methods of natural science and, for that matter, makes an assumption that all disciplines in natural science work the same way when they do not. Second, it carries an inbuilt logic of confirmability; if you go looking for an association you are likely to find it. Third, it focuses on association between events but fails to provide the detailed analytical explanation which is a necessary part of establishing causality – this is why counter examples (such as the Conger and Donnellan, 2007 paper) are so important.

Abduction: The claims made for an inductive or deductive approach are contested fiercely but there is increasing recognition that this might not be a choice between one or the other. Instead research can, and often does proceed, by taking an alternating inductive and deductive perspective – with observation leading to hypotheses which are then explored in relation to the data. In practice whatever their explicit particular stances on research and social theory, our interviewees show the flexibility associated with an abductive approach.

Economics analysis entails.the evaluation of cost benefits

There are two main methods of Economic analysis

– Deductive method this is called a priopri reasoning we start from unchallenged elementary assumptions or fact and then arrive on conclusion (build a hypothesis or theory) using logical analysis of self made analytical analysis.on this kind of reasoning we go from general to specific

Stages include:

*Observation of a task

*Making hypothesis

*Testing hypothesis using more observations

If hypothesis get verified then it is now a certified general economic principle.

Advantages:

*It is a simple method thus doesn’t involve the use of complex software analysis

*It is important for economist as it focuses on economics reasoning

Disadvantages:

Since the method starts from assumptions, if the assumption happens to be logically flawed the whole process will be faulty therefore give wrong conclusion

Inductive method:

This method flows from fact to theory. First, info and facts are collected which will move towards providing evidence using Economic facts and information.

Stages include:

*Observation

*Formulation of hypothesis

*Generalizing principles

*Verifying against actual facts

Advantages:

*Since it is based on facts it is more reliable and realistic

*Making use of experimentation makes the process more scientific this it’s more acceptable generally

Disadvantages:

*If data used is insufficient and faulty it will lead to wrong conclusion

*It’s time consuming and expensive

Name: EKEH CHIZOBA SUCCESS.

JAMB REG NO:20682951GA.

DEPARTMENT: PHILOSOPHY.

METHODS OF ECONOMIC ANALYSIS:

Economic analysis involve two methods:

(1) DEDUCTIVE METHOD AND

(2) INDUCTIVE METHOD.

(1) DEDUCTIVE METHOD/ REASONING: Works from the more general to the more specific. It involves reasoning from a fundamental propositions, the truth of which is assumed.

For instance: When conducting deductive research, you always start with a theory ( the result of inductive research). Reasoning deductive means testing these theories. If there is no theory, you cannot conduct deductive reasearch.

The conclusion of deductive method can only be true , if all the premises set to study are true and the terms are clear.

Example:

_ All dogs have fleas (premise)

_ Benno is a dog (premise)

_ Benno has fleas ( conclusion)

Based on the premises we have , the conclusion must be true. However, if the first premise turns out to be false, the conclusion that “Benno” has fleas cannot be relied upon.

(2) INDUCTIVE METHOD: Involves moving from specific observations to broader generalization and theories. It also involven collection of facts, datas drawing conclusions from them and testing the conclusions by other facts.

For instance: We make observations, discern a pattern, make a generalization and infer an explanation or a theory.

Example: Is the formulation of the generalization of diminishing returns.

Economic analysis involves various methods. The basic methods of economic analysis are

1. deductive method and

2. Inductive method

Both methods uses generalization and theory

1. DEDUCTIVE METHOD

Also called analytical or prior method.It involves deriving conclusions from known accepted truth, takes them and applies them to draw conclusion

For instance,if I accept the general proposition that Nigerians are lawless.I can deductively infere that we are uncivilized. Deductive method moves from general to particular, conclusion of your inference cannot be false given that the premises are true.

Generalization Steps of deductive method.

1. Perception of of the problem- a clear and precise idea of problem is needed

2. Precisely find the technical terms,define them and make assumptions

3. Deduce hypothesis– from the assumptions, made, hypothesis are deduced.The hypothesis could be null or unnull hypothesis

4. Test the hypothesis- before theory are established, hypothesis are verified through direct observation and statistical methods

MERITS OF DEDUCTIVE METHOD.

1. Less time consuming and near to reality

2. Less expensive

3. It’s simple because it’s analytical

4. It can be used to derive economic theories

DEMERITS.

1.The method is not applicable universally

2. It’s highly abstract,requires alot of care to avoid faulty economic reasoning

The imperfect nature of this method led classic and neo classic economists to employe inductive method.

2. INDUCTIVE METHOD

Also called empirical method, and was adopted by Historical School of Economists in a bid to improve faulty assumptions of deductive method.It derives generalization on the basics of experiments, observation and statistical methods.

For example, observation of UNN students during rainy season show that 90% go with umbrella,6%wear rain coat despite it’s high cost,4%go without umbrella or rain coat.

From above,we see that UNN students uses umbrella during rainy season unless they are devoid of sense

A

Igbokwe Gloria somtoochukwu

20690485BA

Economics department

igbokwegloria2003@gmail.com

There’s re two types of Economics analysis

1. Deductive method: in this method of economics analysis which proceed from the general to the particular. This is also known as an hypothetical method, for some assumptions may not correspond to actual facts, but very near , which may be be used as premise from starting, reasoning and drawing conclusion. it is also known as analytical abstract a priori method.

it consists of ;

observation,

deductive reasoning

and instance and testing by means of further observation.

This method provides us with hypothesis which re tested and verified with relevance to facts, we have as Valid economics laws.

2 . INDUCTIVE METHOD: This method aims at developing a theory unlike deductive method aims at testing an existing theory. Inductive method moves from specific observations to broad generalizations and deductive reasoning and other way around. it is a type of method that involves drawing a general conclusion from a set of specific observations.

Name:Kamanu Judith Chinaza

Department : Business Education

Faculty: Vocational and Technical Education

Reg number :21676944CA

Course: Eco 101

There are two basic methods of economic analysis are :

1) Deductive method

2) Inductive method

DEDUCTIVE METHOD

This is also called abstract, analytical and priori method that represents an abstract approach to derivation of economic generalization and theories.

The ways of generalizations are:

1. Perception of the problem to be enquired into

2. Defining precisely the technical terms and making appropriate assumptions often called Postulate or premises.

3.Deducing hypothesis that is deriving conclusions from the premises through the process of logical reasoning.

4. Testing of the hypothesis deduced.

This method is near to reality, it is less consuming and expensive.it is also simple because it is analytical. It’s disadvantages are that it is highly abstract, the premise where inferences are drawn may not hold.

INDUCTIVE METHOD

it is also called emperical method. It’s process of reasoning from practical facts to general principles. This method derives economic generalization on the basis in experimentations, observations and statistical method. Data collected is mostly about a certain economic phenomenon.

STEPS

Observations

Formation of hypothesis

Generalization

Verification

This method is based on facts;it is realistic

It makes statistical techniques easy therefore its more reliable.

It is dynamic

It also helps in future investigations

But it’s disvadvantages are

Generalizations obtained may be faulty if conclusions are drawn from insufficient data.

* collection of data isn’t easy.

It is time consuming and expensive.

What are the basic methods of analysis used by Economists?

The economic analysis involves the formulation of laws and generalizations through two methods namely:

Deductive and Inductive.

DEDUCTIVE METHOD

This is method can also be referred to as a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we have to go from general to specific.

The stages in deductive reasoning are:

* Observation of a task/ issue

* Making the hypothesis

* Testing the hypothesis using more observations, etc.

This reasoning actually gives us a hypothesis and if this hypothesis gets verified we will get a general economic principles or laws.

Moreover just as every thing has an advantage and disadvantage, so also those this method.

ADVANTAGES OF A DEDUCTIVE

METHOD

* It is a simple method, which doesn’t involve the use of any complex software analysis, etc.

* only a simple deductive logic is required.

* This method is really important for economists as it focuses upon economic reasoning which is of paramount importance.

DISADVANTAGES OF AN DEDUCTIVE

METHOD

In this method of reasoning we have to start from assumptions, thus, if the assumptions happen to be logically flawed then the whole process becomes faulty and would lead to wrong conclusions.

Thus, the logical fallacy is a disadvantage of this method.

INDUCTIVE METHOD

This kind of reasoning flows from facts to theory. First, we have to collect informations and facts and then move towards providing evidence using economic theory and facts.

This method formulates principles using the sub-methods:

*Observations

*Experimentations

*Statistical methods.

Data is as well collected about a particular economic theory and then conclusions are drawn. The stages in this method are:

* Observation

* Formulation of a hypothesis

* Generalizing principles

* Verifying against actual facts.

ADVANTAGES OF AN INDUCTIVE

METHOD

* Since this method is based on facts it is more realistic and reliable.

* Using the statistical methods and experimentations makes the process more scientific, thus, it is more acceptable universally rather than just depending on your own reasoning and logic.

* Since the economic environment is dynamic and always changing, relying upon a more scientific method will always helps in reaching logical conclusions.

DISADVANTAGES OF AN INDUCTIVE

METHOD

* If the data that is been used is insufficient and faulty it would lead to faulty conclusions, thereby making the hypothesis less reliable.

* It is a time-consuming process and thus really expensive as well.

* The collection of all the data is not an easy job and it varies from person to person. As to how they collect the data.

Methods of Economic Analysis,.

1Deductive method,also know as abstract or priori method which required abstract approach to the derivation of Economic generalisation and theories.It implies perception of the problem which means having clear knowledge of the two variables that you want to derive your generalisation from.Also,defining your postulate which requires finding the relationship between the two variables and why you think the two variables are related based on your own observation which makes you think so.There also is hypothesis which requires predicting the possible factors that may affect the relationship between the two variables.Testing the hypothesis, verifying if the factors that are assumed to affect the relationship between two variables are factual in nature before it is generally accepted.

2.lnductive method also know as empirical method requires collecting many observation on a particular data for using statistical methods to analysis whether is consistent with actual facts or not.

In logic, we often refer to the two broad methods of reasoning as the deductive and inductive approaches.

Deductive reasoning works from the more general to the more specific. Sometimes this is informally called a “top-down” approach. We might begin with thinking up a theory about our topic of interest. We then narrow that down into more specific hypotheses that we can test. We narrow down even further when we collect observations to address the hypotheses. This ultimately leads us to be able to test the hypotheses with specific data – a confirmation (or not) of our original theories.

Inductive reasoning works the other way, moving from specific observations to broader generalizations and theories. Informally, we sometimes call this a “bottom up” approach (please note that it’s “bottom up” and not “bottoms up” which is the kind of thing the bartender says to customers when he’s trying to close for the night!). In inductive reasoning, we begin with specific observations and measures, begin to detect patterns and regularities, formulate some tentative hypotheses that we can explore, and finally end up developing some general conclusions or theories.

These two methods of reasoning have a very different “feel” to them when you’re conducting research. Inductive reasoning, by its very nature, is more open-ended and exploratory, especially at the beginning. Deductive reasoning is more narrow in nature and is concerned with testing or confirming hypotheses. Even though a particular study may look like it’s purely deductive (e.g., an experiment designed to test the hypothesized effects of some treatment on some outcome), most social research involves both inductive and deductive reasoning processes at some time in the project. In fact, it doesn’t take a rocket scientist to see that we could assemble the two graphs above into a single circular one that continually cycles from theories down to observations and back up again to theories. Even in the most constrained experiment, the researchers may observe patterns in the data that lead them to develop new theories

NAME: OKORO SANDRA ADAUGO

REG NO: 2019/248481

EMAIL: adaugosandra2019@gmail.com

Economic analysis involves the formulation of laws and generalizations through two methods- deductive and inductive.

Deductive method is also known as abstract method or analytical method. This method is based on a priori reasoning and conclusions are drawn from certain fundamental assumptions

The deductive method moves from the general assumption to the specific application.

STEPS OF DEDUCTIVE METHOD:This reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws.

The steps in deductive reasoning are:

i) Observation of a task/ issue

ii)Making the hypothesis

iii) Testing the hypothesis using more observations, etc.

ADVANTAGES OF DEDUCTIVE METHOD

The deductive method is a simple method, because it doesn’t involve the use of any complex software analysis only simple deductive logic is required.

It is also real, powerful, exact, indispensable and universal.

This method is important for economists as it focuses on economic reasoning which is of utmost importance.

DISADVANTAGES OF DEDUCTIVE METHOD

In this method of reasoning we start from assumptions, meaning that if the assumptions happen to be logically flawed or unrealistic the whole process becomes faulty and would give misleading conclusions. Thus, logical fallacy is a disadvantage of this method.

The deductive method is also not applicable universally because the premises from which they are deduced may not hold good at all time and places.

INDUCTIVE METHOD

The inductive method is also called the empirical method, it involves the process of reasoning from particular facts to general principle

First, we collect information and facts and then move towards providing evidence using economic theory and facts.

The inductive method moves from specific observations to generalization.

STEPS OF INDUCTIVE METHOD:

The main steps involved in the application of inductive method are:

(i) Observation

(ii) Formulation of hypothesis.

(iii) Generalizing principles

(iv) Verifying against actual facts.

ADVANTAGES OF INDUCTIVE METHOD

(i) It is based on facts as such the method is realistic.

(ii) Induction method also helps in future investigations.

(iii) Inductive method is dynamic. The changing economic phenomenon are analyzed and on the basis of collected data, conclusions and solutions are drawn from them.

(iv) In order to test the economic principles, method makes statistical techniques. The inductive method is, therefore, more reliable.

DISADVANTAGES OF INDUCTIVE METHOD:

The main weaknesses of this method are as under:

(i) The inductive method is time-consuming and expensive.

(ii) The collection of data itself is not an easy task. The sources and methods employed in the collection of data differ from investigator to investigator. The results, therefore, may differ even with the same problem.

(iii) If conclusions drawn from insufficient data, the generalizations obtained may be faulty

Methods of Economic Analysis:

There are two methods of economic analysis. They are:(1) Deductive Method and (2) Inductive Method.

(1) Deductive Method of Economic Analysis:

The deductive method is also named as analytical, abstract or prior method. The deductive method consists in deriving conclusions from general truths, takes few general principles and applies them draw conclusions.

For instance, if we accept the general proposition that man is entirely motivated by self-interest. In applying the deductive method of economic analysis, we proceed from general to particular.

Steps of Deductive Method:

The main steps involved in deductive logic are :

(i) Perception of the problem to be inquired into: In the process of deriving economic generalizations, the analyst must have a clear and precise idea of the problem to be inquired into.

(ii) Defining of terms: The next step in this direction is to define clearly the technical terms used analysis. Further, assumptions made for a theory should also be precise.

(iii) Deducing hypothesis from the assumptions: The third step in deriving generalizations is deducing hypothesis from the assumptions taken.

(iv) Testing of hypothesis: Before establishing laws or generalizations, hypothesis should be verified through direct observations of events in the rear world and through statistical methods. (Their inverse relationship between price and quantity demanded of a good is a well established generalization).

Merits of Deductive Method:

The main merits of deductive method are as under:

(i) This method is near to reality. It is less time consuming and less expensive.

(ii) The use of mathematical techniques in deducing theories of economics brings exactness and clarity in economic analysis.

(iii) There being limited scope of experimentation, the method helps in deriving economic theories.

(iv) The method is simple because it is analytical.

Demerits of Deductive Method:

It is true that deductive method is simple and precise, underlying assumptions are valid.

(i) The deductive method is simple and precise only if the underlying assumptions are valid. More often the assumptions turn out to be based on half truths or have no relation to reality. The conclusions drawn from such assumptions will, therefore, be misleading.

(ii) Professor Learner describes the deductive method as ‘armchair’ analysis. According to him, the premises from which inferences are drawn may not hold good at all times, and places. As such deductive reasoning is not applicable universally.

(iii) The deductive method is highly abstract. It require; a great deal of care to avoid bad logic or faulty economic reasoning.

As the deductive method employed by the classical and neo-classical economists led to many facile conclusions due to reliance on imperfect and incorrect assumptions, therefore, under the German Historical School of economists, a sharp reaction began against this method. They advocated a more realistic method for economic analysis known as inductive method.

(2) Inductive Method of Economic Analysis:

Inductive method which also called empirical method was adopted by the “Historical School of Economists”. It involves the process of reasoning from particular facts to general principle.

This method derives economic generalizations on the basis of (i) Experimentations (ii) Observations and (iii) Statistical methods.

In this method, data is collected about a certain economic phenomenon. These are systematically arranged and the general conclusions are drawn from them.

For example, we observe 300 persons in the market. We find that nearly 295 persons buy from the cheapest shops, Out of the 5 which remains, 4 persons buy local products even at higher rate just to patronize their own products, while the fifth is a fool. From this observation, we can easily draw conclusions that people like to buy from a cheaper shop unless they are guided by patriotism or they are devoid of commonsense.

Steps of Inductive Method:

The main steps involved in the application of inductive method are:

(i) Observation.

(ii) Formation of hypothesis.

(iii) Generalization.

(iv) Verification.

Merits of Inductive Method:

(i) It is based on facts as such the method is realistic.

(ii) In order to test the economic principles, method makes statistical techniques. The inductive method is, therefore, more reliable.

(iii) Inductive method is dynamic. The changing economic phenomenon are analyzed and on the basis of collected data, conclusions and solutions are drawn from them.

(iv) Induction method also helps in future investigations.

Demerits of Inductive Method:

The main weaknesses of this method are as under:

(i) If conclusions drawn from insufficient data, the generalizations obtained may be faulty.

(ii) The collection of data itself is not an easy task. The sources and methods employed in the collection of data differ from investigator to investigator. The results, therefore, may differ even with the same problem.

(iii) The inductive method is time-consuming and expensive.

Conclusion:

The above analysis reveals that both the methods have weaknesses. We cannot rely exclusively on any one of them. Modern economists are of the view that both these methods are complimentary. They partners and not rivals. Alfred Marshall has rightly remarked:

“Inductive and Deductive methods are both needed for scientific thought, as the right and left foot are both needed for walking”.

We can apply any of them or both as the situation demands.

The method used by economist in reasoning are inductive and deductive reasoning is that inductive reasoning aims at developing a theory while deductive reasoning aims at testing an existing theory. Inductive reasoning moves from specific observations to broad generalizations, and deductive reasoning the other way around.

18 Apr 2019

Name:Ezeme Lilian ifeoma

Department: Economics

Reg no:20689942gf

The method of Economics analysis are:

A. Inductive method

B. Deductive method

Inductive method :This is a theory based on data obtained from actual experience . Basically,in induction method ,it is done in two forms: Experimental and stastistical form.In this form facts are collected first,arranged and conclusions are drawn.Then these general conclusion are further verified with reference to actual facts.The induction method is generally associated with the stastical form of induction. It has larger field in Economic investigation than the method of Experimentation

Deductive method:This is the scientific approach based on logical reasoning from formal data and assumption. Then by logical reasoning,we arrive at certain conclusions. The conclusions is drawn from general to the particular which is known as hypothetical method . The argument in this hypothetical method is that some of the assumptions may not correspond to the actual facts but very near to actual facts. It is also called abstract Analytical and prior method

NAME: IGWEDIBIA JUDITH CHIAMAKA

MATRIC NO: 2019/246689

DEPT: PURE AND INDUSTRIAL CHEMISTRY

EMAIL: igwedibiajudith@gmail.com

Basic Methods of Analysis used by Economists

(1) Deductive Method

(2) Inductive Method.

(1) Deductive Method of Economic Analysis:

The deductive method is also known as analytical, abstract or prior method.

Steps of Deductive Method:

The main steps involved in deductive logic are as follows:

(i) Perception of the problem to be inquired into: In the process of deriving economic generalizations, the analyst must have a clear and precise idea of the problem to be inquired into.

(ii) Defining of terms: The next step in this direction is to define clearly the technical terms used analysis. Further, assumptions made for a theory should also be precise.

(iii) Deducing hypothesis from the assumptions: The third step in deriving generalizations is deducing hypothesis from the assumptions taken.

(iv) Testing of hypothesis: Before establishing laws or generalizations, hypothesis should be verified through direct observations of events in the rear world and through statistical methods. (Their inverse relationship between price and quantity demanded of a good is a well established generalization).

Merits of Deductive Method:

The main merits of deductive method are as follows:

i. It is less time consuming and less expensive.

(iv) The method is simple because it is analytical.

Demerits of Deductive Method:

i. The deductive method is highly abstract. It require; a great deal of care to avoid bad logic or faulty economic reasoning.

(2) Inductive Method of Economic Analysis:

Inductive method which also called empirical method was adopted by the “Historical School of Economists”. It involves the process of reasoning from particular facts to general principle.

Steps of Inductive method:

The main steps involved in the application of inductive method are:

(i) Observation.

(ii) Formation of hypothesis.

(iii) Generalization.

(iv) Verification.

Merits of Inductive Method:

(i) It is based on facts as such the method is realistic.

(ii) In order to test the economic principles, method makes statistical techniques. The inductive method is, therefore, more reliable.

Demerits of Inductive Method:

The main weaknesses of this method are as under:

(i) If conclusions drawn from insufficient data, the generalizations obtained may be faulty.

(iii) The inductive method is time-consuming and expensive.

Department of Pure and Industrial Chemistry

The basic methods of analysis used by Economists are; The Inductive reasoning and The Deductive reasoning.

The deductive method: This is also called a priori reasoning with the process of making unchallenged elementary assumptions/fact to building a hypothesis or theory using logical analysis or our own abilities. Here, we go from general to specific. This method is of advantage in the sense that it does not involve the use of any complex software analysis , hence it is simple and it is of disadvantage that since the method starts from assumptions, thus, if the assumptions happen to be logically flared the whole process becomes faulty and would give wrong conclusion.

The Inductive method: Here, reasoning flows from facts to theory . First, we collect information and facts and then move towards providing evidence using economic theory and facts This method formulates principles using the sub-methods observation, experimentations, statistical methods. Data is collected about a particular economic theory and then conclusions are drawn. This method too is of advantage that it is more realistic and reliable since it is based on facts and not just assumptions and since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusion. The Bad thing or the disadvantage about this method is that if the data used is insufficient it results to faulty conclusions making the hypothesis less reliable, it’s a time consuming process and this very expensive.

Any economic analysis involves the formulation of laws and generalizations through two methods- deductive and inductiveThis is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

Deductive Method

Making the hypothesis

Testing the hypothesis using more observations, etc.

Advantages of Deductive MethodIt is a simple method, doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

Disadvantages of Deductive Method

Deductive And Inductive Methods

ObservationUsing statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

Formulation of a hypothesis

Generalizing principles

Verifying against actual facts.

Advantages of Inductive Method

Since it is based on facts it is more realistic and reliable.

Disadvantages of Inductive Method

It is a time-consuming process and thus expensive as well.

The collection of all the data is not an easy job and varies from person to person. As to how they collect data.

MICHAEL NKECHINYERE AGATHA

REG. NO.: 2019/SD/37705

QUESTIONS

1) What are the difference between macroeconomic and microeconomics?

2) Discuss the three different ways of computing GDP.

3) Without diagrams, clearly discuss the circular flow of income and product in a 2 – sector economy, 3 – sector economy and 4 – sector economy.

Micro-economics refers to the branch of economics which deals with smaller units or components of the economics. It is concerned with the analysis of basic decision making components of households, individuals, firma and governments. It relates to cost, output, production, pricing and marketing activities of households, firms and governments. Microeconomics focuses on firms and individuals.

Macro-economics refers to the branch of economics which deals with larger units or aggregate of the economy. Macro-economic relates to large aggregates such as national income; inflation, unemployment, balance of payment etc. Macro economics focuses on the sum total of economics activity, dealing with the issues of growth, inflation and unemployment.

Differences between Micro-Economics and Macro-Economics

S/N Micro-Economics Macro-Economics

1 involves supply and demand in individual markets monetary/fiscal policy. e.g. what effect does interest rates have on the whole economy.

2 involves individual consumer behaviour e.g. consumer choice theory reasons for inflation and unemployment.

3 individual labour markets e.g. demand for labour wage determination economic growth

4 externalities arising from production and consumption e.g. externalities international trade and globalisation

Formula to Calculate G.D.P

GDP is Gross Domestic product and is indicator to measure the economic health of a country. The formular to calculate GDP is of three types which include:

Expenditure Approach;

Income approach, and

production approach

Expenditure Approach: There are three main groups of expenditure household, business and government. By adding all expenses, we get below equation.

GDP = C + I + G + NX

Where

C = All private consumption/consumer spending in the economy. It includes durable goods, nondurable goods and services

I = All of a country’s investment in capital equipment, housing etc.

G = All of the country’s government spending. It includes the salaries of a government employee, construction, maintenance, etc.

NX = Net country export – Net country import.

This can also be written as:

GDP = Consumption + Investment + government spending + Net export

Income Approach: The income approach is a way for calculation of GDP by total income generated by goods and services.

GDP = Total National Income + sales taxes + Depreciation + Net foreign factor income.

Where – Total national income = sum of rent, salaries profit.

Sales Taxes – Tax. Imposed by a government on sales of goods and services.

Depreciation – The decrease in the value of an asset.

Net foreign factor income – Income earn by a foreign factor like the amount of foreign company or foreign person earn from the country and it is also the difference between a country citizen and country earn.

Production or Value Added Approach:

From the name, it is clear that value is added at the time of production. It is also known as the reverse of the expenditure approach. To estimate the gross value – added total cost of economic output is reduced by the cost of intermediate goods that are used for the production of the facial goods.

Gross value added = Gross value of output – value of intermediate consumption.

GDP Formular

Expenditure Approach = C + I + G + NX

Income Approach = Total National Income + Sales taxes + Depreciation + Net foreign factor income.

Value Added Approach = Grosses value of output – Value of intermediate consumption.

CIRCULAR INCOME FLOW IN A TWO SECTOR ECONOMY

Real flow of resources, goods and services such as land, capital and entrepreneurial ability flow from households to business firms. Money flow from business firms to the households as factor payments such as wages, rent, interest and profits.

Money flows from households to firms as consumption expenditure made by the households on the goods and services produced by the firms, while the flow of goods and services is in opposite direction from business firms to households.

IN THREE SECTOR ECONOMY WITH GOVERNMENT

Government affects the economy in a number of ways, such as its taxing, spending and borrowing roles. Government purchase goods and services just as households and firms do. Government expenditure takes many forms including spending on capital goods and infrastructure (highways, power, communication), on defence goods, and on education and public health etc. These add to the money flows. Government expenditure may be financed through taxes, out of assets or by borrowing. The money flow households and business firms to the government. This money flow includes all the tax payments made by households less transfer payments received from the government. Transfer payments are treated as negative tax payment.

INCOME FLOWS IN FOUR SECTOR OPEN ECONOMY ADDING FOREIGN SECTOR

This includes the foreign sector which reveals to us the transaction of the domestic economy with foreign countries. Foreigners interact with the domestic firms and households through exports and imports of goods and services as well as through borrowing and lending operations through financial market.

CIRCULAR FLOW OF PRODUCT

Product flow is the distribution channel that is viewed as a unified system of interdependent organizations which intermediaries work together to build values as products proceed through the channel to the consumer. It includes movement of goods from supplier to consumer (internal as well as external), as well as dealing with customer service needs such as input materials or consumables or services like housekeeping.

Name: Samuel Favour Udochukwu

Reg num: 22000131df

Dept: Public Administration and Local Government

Faculty: Social Science

Methods of Economic Analysis

1. Deductive Method= The deductive method can also be called abstract method. There are principle steps in which we can derive economic generalizations through deductive method.

a) Perception of the problem. In any scientific inquiry, the analyst must have a clear idea of the problem he wants to solve.

b) He must define precisely the various technical terms to be used in the analysis.

c) Deducing hypothesis through logical deduction. A hypothesis describes relationship between factors affecting a phenomenon.

d) Hypothesis gotten above have to be verified before the are established as principles of economics.

2. Inductive Method= The inductive method is also called “Empirical method”. It obtains economic generalizations on the basis of experience and observations. In this method, detailed data are gathered with regard to a particular economic term. Effort is now made to get at certain generalizations which follow from observations collected. Empirical studies made in inductive approach also brings a light significant economic facts which require analytical explanation through deductive logic.

NAME: IFEABUNIKE ONYINYE JACINTA

REG NO: 2019/244764

FACULTY: PHYSICAL SCIENCES

DEPT: PURE AND INDUSTRIAL CHEMISTRY

ANSWERS: There are two basic methods of economic analysis which are:

1. The deductive method

2. The Inductive method

-DEDUCTIVE METHOD OF ECONOMIC ANALYSIS: The deductive method is also known as the analytical, abstract or prior method. It involves deriving conclusions from general truths, taking few general principles and applies them in drawing conclusions.

For instance, if we accept the general proposition that man is entirely motivated by self-interest. In applying the deductive method of economic analysis, we proceed from general to particular.

STEPS INVOLVED IN DEDUCTIVE METHOD:(i) Perception of the problem to be inquired into: In the process of deriving economic generalizations, the analyst must have a clear and precise idea of the problem to be inquired into.

(ii) Definition of terms: The next step in this direction is to define clearly the technical terms used analysis. Further, assumptions made for a theory should also be precise.

(iii) Deducing hypothesis

(iv) Testing of hypothesis: Before establishing laws or generalizations, hypothesis should be verified through direct observations of events in the rear world and through statistical methods.

-INDUCTIVE METHOD OF ECONOMIC ANALYSIS: This type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. Here data is collected about a particular economic theory and then conclusions are drawn.

STAGES INVOLVED IN THIS METHOD ARE:

i. Observation

ii. Formulation of a hypothesis

iii. Generalizing principles

iv. Verifying against actual facts.

ADVANTAGES OF THE INDUCTIVE METHOD

i.It is based on facts therefore more realistic and reliable.

ii. Using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

iii. Since the economic environment is dynamic, relying upon a more scientific method always helps reach logical conclusions.

DISADVANTAGES OF THE INDUCTIVE METHOD

i. Insufficient data leads to faulty conclusions, making the hypothesis less reliable.

ii. It is a time-consuming process and expensive as well.

iii.Data collected often varies from person to person.

NAME: CHUKWU IFEOMA RITA

REG. NO: 2019/241539

EMAIL: chukwuifeomaa@gmail.com

Methods Of Economic Analysis.

There are two basic methods of analysis used by Economists

-Deductive Method

-Inductive Method

Deductive Method.

This is also called analytical or a prior method.

Deductive Method consists in deriving conclusions from general truths, takes few general principles and applies them in drawing conclusions

Steps of Deductive Method

(I) Perception Of The Problem To Be Inquired Into:

The first step involved in deductive method of economic analysis, the analyst must have an exact and comprehensible idea of the problem to be inquired into

(II) Defining Of Terms:

In this step, you need to clearly define the technical terms used in the analysis

(III) Deducing Hypothesis from the assumptions:

Here, you need to draw conclusion on the hypothesis from the assumptions

(IV) Testing Of Hypothesis:

On the process of establishing laws, hypothesis must first be tested

ADVANTAGES.

➜The deductive method is less expensive and less time consuming

➜This method is simple because it is analytical

➜This method also helps in deriving economic theories

DISADVANTAGES.

➜The method is highly abstract; it requires a good deal of care to avoid bad logic or faulty economic reasoning

➜The premises from which inferences are drawn may not hold good at all times and places.

➜The deductive method is simple and precise only when the assumptions are valid.

Inductive Method.

This is also called empirical method. It involves the process of reasoning from particular facts to general principle

Steps Of Inductive Method

(I) Observation

(II) Formation Of Hypothesis

(III) Generalization

(IV) Verification

ADVANTAGES.

➜Inductive method also helps in future investigation

➜It is based on facts as such, the method is realistic.

➜This method is reliable and it makes statistical techniques

DISADVANTAGES

➜The inductive method is time consuming and expensive.

➜The generalization may be faulty only if the conclusions are drawn from insufficient data.

➜The sources and methods employed in the collection of data differ from investigator to investigator. Therefore, the results may differ even with the same problem

Methods of Economic Analysis:

For instance, if we accept the general proposition that man is entirely motivated by self-interest. In applying the deductive method of economic analysis, we proceed from general to particular.

(i) Perception of the problem to be inquired into: In the process of deriving economic generalizations, the analyst must have a clear and precise idea of the problem to be inquired into.

(iii) Deducing hypothesis from the assumptions: The third step in deriving generalizations is deducing hypothesis from the assumptions taken.

There are two methods of economic analysis. They are:(1) Deductive Method and (2) Inductive Method.

(1) Deductive Method of Economic Analysis:

The deductive method is also named as analytical, abstract or prior method. The deductive method consists in deriving conclusions from general truths, takes few general principles and applies them draw conclusions.

Steps of Deductive Method:

The main steps involved in deductive logic are :

(ii) Defining of terms: The next step in this direction is to define clearly the technical terms used analysis. Further, assumptions made for a theory should also be precise.

(iv) Testing of hypothesis: Before establishing laws or generalizations, hypothesis should be verified through direct observations of events in the rear world and through statistical methods. (Their inverse relationship between price and quantity demanded of a good is a well established generalization).

Merits of Deductive Method:

The main merits of deductive method are as under:

(i) This method is near to reality. It is less time consuming and less expensive.

(ii) The use of mathematical techniques in deducing theories of economics brings exactness and clarity in economic analysis.

(iii) There being limited scope of experimentation, the method helps in deriving economic theories.

(iv) The method is simple because it is analytical.

Demerits of Deductive Method:

It is true that deductive method is simple and precise, underlying assumptions are valid.

(i) The deductive method is simple and precise only if the underlying assumptions are valid. More often the assumptions turn out to be based on half truths or have no relation to reality. The conclusions drawn from such assumptions will, therefore, be misleading.

(ii) Professor Learner describes the deductive method as ‘armchair’ analysis. According to him, the premises from which inferences are drawn may not hold good at all times, and places. As such deductive reasoning is not applicable universally.

(iii) The deductive method is highly abstract. It require; a great deal of care to avoid bad logic or faulty economic reasoning.

As the deductive method employed by the classical and neo-classical economists led to many facile conclusions due to reliance on imperfect and incorrect assumptions, therefore, under the German Historical School of economists, a sharp reaction began against this method. They advocated a more realistic method for economic analysis known as inductive method.

(2) Inductive Method of Economic Analysis:

Inductive method which also called empirical method was adopted by the “Historical School of Economists”. It involves the process of reasoning from particular facts to general principle.

This method derives economic generalizations on the basis of (i) Experimentations (ii) Observations and (iii) Statistical methods.

In this method, data is collected about a certain economic phenomenon. These are systematically arranged and the general conclusions are drawn from them.

For example, we observe 300 persons in the market. We find that nearly 295 persons buy from the cheapest shops, Out of the 5 which remains, 4 persons buy local products even at higher rate just to patronize their own products, while the fifth is a fool. From this observation, we can easily draw conclusions that people like to buy from a cheaper shop unless they are guided by patriotism or they are devoid of commonsense.

Steps of Inductive Method:

The main steps involved in the application of inductive method are:

(i) Observation.

(ii) Formation of hypothesis.

(iii) Generalization.

(iv) Verification.

Merits of Inductive Method:

(i) It is based on facts as such the method is realistic.

(ii) In order to test the economic principles, method makes statistical techniques. The inductive method is, therefore, more reliable.

(iii) Inductive method is dynamic. The changing economic phenomenon are analyzed and on the basis of collected data, conclusions and solutions are drawn from them.

(iv) Induction method also helps in future investigations.

Demerits of Inductive Method:

The main weaknesses of this method are as under:

(i) If conclusions drawn from insufficient data, the generalizations obtained may be faulty.

(ii) The collection of data itself is not an easy task. The sources and methods employed in the collection of data differ from investigator to investigator. The results, therefore, may differ even with the same problem.

(iii) The inductive method is time-consuming and expensive.

Conclusion:

The above analysis reveals that both the methods have weaknesses. We cannot rely exclusively on any one of them. Modern economists are of the view that both these methods are complimentary. They partners and not rivals. Alfred Marshall has rightly remarked:

“Inductive and Deductive methods are both needed for scientific thought, as the right and left foot are both needed for walking”.

We can apply any of them or both as the situation demands.

The economist uses two method in analysis used and they are inductive and deductive method reasoning is that inductive reasoning aims at developing a theory while deductive reasoning aims at testing an existing theory. Inductive reasoning moves from specific observations to broad generalizations, and deductive reasoning the other way around.

NAME:Ugwunweze Robinson Ndubuisi

MATRIC NO: 2020/243243

DEPARTMENT: public Administration And local Government

Economic deals with the study of how the goods and services that we want for our consumption are get produced and how they are distributed among people.

INDUCTIVE reasoning takes a specific representative case or fact and then, draws generalization or conclusion from them.

Inductive reasoning must be based on a sufficient amount of reliable evidence, in other words the facts you draw in must fairly represent the larger station or population .

Example;

(a) Fair trade agreements have raised the quality of life for coffee producers, so

(b) Fair trade agreements could be used to help other farmers as well.

In this example the specific case of fair trade agreements with coffee producers us being used as the starting point for the claim because these agreements have worked the author conclude that it could work for other farmer as well.

DEDUCTIVE reasoning begins with a generalization and then applies it to a specific case. The generalizatio you start will must have been based on a sufficient amount of evidence. Example,

Genetically modified seeds have caused poverty hunger, and a decline in bio-diversity everywhere there have been introduced, so there is no reason the same thing will not occur which genetically modified corn seeds are introduced in Mexico.

In this example the author starts with a large claim, that genetically modified seeds have been problematic everywhere, and from this draws the more localized or special conclusion vthat Mexico will be affected in the same way.

There are two main basic method of Economic Analysis, which is Deductive and Inductive reasoning

DEDUCTIVE METHOD

This is a simple logic of knowledge required based solely on experience or personal observations that comes with the power of reasoning which uses general principles to arrive at specific facts or conclusion. It is ought to give us a hypothesis and when gets verified we get general Economic principles or laws.

But when our assumption happens to be logically flawed the whole process becomes faulty which is one disadvantage of this method.

Deductive method can also be called Priori reasoning.

INDUCTIVE METHOD

This is a method that formulates principles using the sub methods observations, experiments, statistical, Economic theory etc to collect information and flows of fact to theory, therefore providing evidence.

This method is said to be more realistic, reliable and acceptable universally because of the statistical methods and experimentations than just depending on your own reasoning and logic, but when the collection of all the data used is insufficient and faulty it would lead to faulty conclusions making the hypothesis less reliable.

Name:Ani Godlen DaberechiThis is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

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Deductive Method

Making the hypothesis

Testing the hypothesis using more observations, etc.

Disadvantages of Deductive Method

Deductive And Inductive Methods

ObservationUsing statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

Formulation of a hypothesis

Generalizing principles

Verifying against actual facts.

Advantages of Inductive Method

Since it is based on facts it is more realistic and reliable.

Disadvantages of Inductive Method

It is a time-consuming process and thus expensive as well.

The collection of all the data is not an easy job and varies from person to person. As to how they collect data

Name;Ngerem ugonna Samuel

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Faculty of Health science

Nursing..

INDUCTIVE:This type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods…Using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

Advantages; Since it is based on facts it is more realistic and reliable. And also

Disadvantages; If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable. And

It is a time-consuming process and thus expensive as well…

DEDUCTIVE METHOD:This is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

Observation of a task/ issue

Making the hypothesis

Testing the hypothesis using more observations, etc.

Advantages; It is a simple method, doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

Disadvantages; In this method of reasoning we start from assumptions, thus, if the assumptions happen to be logically flawed the whole process becomes faulty and would give wrong conclusions. Thus, the logical fallacy is a disadvantage of this method.

Any economic analysis involves the formulation of laws and generalizations through two methods- (deductive and inductive)

*Deductive Method:This is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

1. Observation of a task/ issueThis reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws.

2. Making the hypothesis

3. Testing the hypothesis using more observations, etc.

*Advantages of Deductive MethodIt is a simple method, doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

In this method of reasoning we start from assumptions, thus, if the assumptions happen to be logically flawed the whole process becomes faulty and would give wrong conclusions. Thus, the logical fallacy is a disadvantage of this method.

*Disadvantages of Deductive Method

*Inductive MethodThis type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods.

1. Observation

2. Formulation of a hypothesis

3. Generalizing principles

4.Verifying against actual facts.

*Advantages of Inductive MethodUsing statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

The collection of all the data is not an easy job and varies from person to person. As to how they collect data.

Since it is based on facts it is more realistic and reliable.

Disadvantages of Inductive Method

It is a time-consuming process and thus expensive as well.

Name: Augustine Uchechukwu Sampson

Reg no:2020/243121

Department: Philosophy

What are the basic methods of analysis used by economists?

they are two basic methods:

(1) Deductive method

(2) Inductive method

Briefly and convincingly discuss each of them.

(1) Deductive method:it means drawing of inference or reasoning from universal to individual.

Steps of Deductive method

(a)formulating the assumption: the investigator forms an assumption which are the basic of hypothesis in any economic inquiry,more that one set of assumption.

(b) selecting the problem:the problem which investigates from inquiry must be stated clearly the more narrow the problem,the better it will be to conduct the inquiry.

(2) Inductive method:it means collecting information from personal research and giving it out to the universe.

Steps of Inductive method

(a)the data should be analysed using appropriate analytical statical technique.

(b)the problem should be properly stated.

(c) observation:the problem should be observed in a special way

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Department: Nursing sciences

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Inductive method:

The inductive method was employed in economics by the German Historical School which sought to develop economics wholly from historical research. The historical or inductive method expects the economist to be primarily an economic historian who should first collect material, draw gereralisations, and verify the conclusions by applying them to subsequent events. For this, it uses statistical methods. The Engel’s Law of Family Expenditure and the Malthusian Theory of Population have been derived from inductive reasoning.

1. The Problem:

In order to arrive at a generalisation concerning an economic phenomenon, the problem should be properly selected and clearly stated.

2. Data:

The second step is the collection, enumeration, classification and analysis of data by using appropriate statistical techniques.

3. Observation:

Data are used to make observation about particular facts concerning the problem.

4. Generalisation:

On the basis of observation, generalisation is logically derived which establishes a general truth from particular facts.

Thus induction is the process in which we arrive at a generalisation on the basis of particular observed facts.

The best example of inductive reasoning in economics is the formulation of the generalisation of diminishing returns. When a Scottish farmer found that in the cultivation of his field an increase in the amount of labour and capital spent on it was bringing in less than proportionate returns year after year, an economist observed such instances in the case of a number of other farms, and then he arrived at the generalisation that is known as the Law of Diminishing Returns.

Merits of Inductive Method:

The chief merits of this method are as follows:

(1) Realistic:

The inductive method is realistic because it is based on facts and explains them as they actually are. It is concrete and synthetic because it deals with the subject as a whole and does not divide it into component parts artificially

(2) Future Enquiries:

Induction helps in future enquiries. By discovering and providing general principles, induction helps future investigations. Once a generalisation is established, it becomes the starting point of future enquiries.

(3) Statistical Method:

The inductive method makes use of the statistical method. This has made significant improvements in the application of induction for analysing economic problems of wide range. In particular, the collection of data by governmental and private agencies or macro variables, like national income, general prices, consumption, saving, total employment, etc., has increased the value of this method and helped governments to formulate economic policies pertaining to the removal of poverty, inequalities, underdevelopment, etc.

(4) Dynamic:

The inductive method is dynamic. In this, changing economic phenomena can be analysed on the basis of experiences, conclusions can be drawn, and appropriate remedial measures can be taken. Thus, induction suggests new problems to pure theory for their solution from time to time.

Demerits of Inductive Method:

However, the inductive method is not without its weaknesses which are discussed below.

(1) Misenterpretation of Data:

Induction relies on statistical numbers for analysis that “can be misused and misinterpreted when the assumptions which are required for their use are forgotten.”

(2) Uncertain Conclusions:

Boulding points out that “statistical information can only give us propositions whose truth is more or less probable it can never give us certainty.”

(3) Lacks Concreteness:

Definitions, sources and methods used in statistical analysis differ from investigator to investigator even for the same problem, as for instance in the case of national income accounts. Thus, statistical techniques lack concreteness.

(4) Costly Method:

The inductive method is not only time-consuming but also costly. It involves detailed and painstaking processes of collection, classification, analyses and interpretation of data on the part of trained and expert investigators and analysts

Deductive method:

Deduction Means reasoning or inference from the general to the particular or from the universal to the individual. The deductive method derives new conclusions from fundamental assumptions or from truth established by other methods. It involves the process of reasoning from certain laws or principles, which are assumed to be true, to the analysis of facts.

Then inferences are drawn which are verified against observed facts. Bacon described deduction as a “descending process” in which we proceed from a general principle to its consequences. Mill characterised it as a priori method, while others called it abstract and analytical.

Deduction involves four steps: (1) Selecting the problem. (2) The formulation of assumptions on the basis of which the problem is to be explored. (3) The formulation of hypothesis through the process of logical reasoning whereby inferences are drawn. (4) Verifying the hypothesis. These steps are discussed as under.

row relating to an industry. The narrower the problem the better it would be to conduct the enquiry.

(2) Formulating Assumptions:

The next step in deduction is the framing of assumptions which are the basis of hypothesis. To be fruitful for enquiry, the assumption must be general. In any economic enquiry, more than one set of assumptions should be made in terms of which a hypothesis may be formulated.

Formulating Hypothesis:

The next step is to formulate a hypothesis on the basis of logical reasoning whereby conclusions are drawn from the propositions. This is done in two ways: First, through logical deduction. If and because relationships (p) and (q) all exist, then this necessarily implies that relationship (r) exists as well. Mathematics is mostly used in these methods of logical deduction.

(4) Testing and Verifying the Hypothesis:

The final step in the deductive method is to test and verify the hypothesis. For this purpose, economists now use statistical and econometric methods. Verification consists in confirming whether the hypothesis is in agreement with facts. A hypothesis is true or not can be verified by observation and experiment. Since economics is concerned with human behaviour, there are problems in making observation and testing a hypothesis.

For example, the hypothesis that firms always attempt to maximise profits, rests upon the observation that some firms do behave in this way. This premise is based on a priori knowledge which will continue to be accepted so long as conclusions deduced from it are consistent with the facts. So the hypothesis stands verified. If the hypothesis is not confirmed, it can be argued that the hypothesis was correct but the results are contradictory due to special circumstances.

Under these conditions, the hypothesis may turn out to the wrong. In economics, most hypotheses remain unverified because of the complexity of factors involved in human behaviour which, in turn, depend upon social, political and economic factors. Moreover, controlled experiments in a laboratory are not possible in economics. So the majority of hypotheses remain untested and unverified in economics.

Merits of Deductive Method:

The deductive method has many advantages.

(1) Real:

It is the method of “intellectual experiment,” according to Boulding. Since the actual world is very complicated, “what we do is to postulate in our own minds economic systems which are simpler than reality but more easy to grasp. We then work out the relationship in these simplified systems and by introducing more and more complete assumptions, finally work up to the consideration of reality itself.” Thus, this method is nearer to reality.

(2) Simple:

The deductive method is simple because it is analytical. It involves abstraction and simplifies a complex problem by dividing it into component parts. Further, the hypothetical conditions are so chosen as to make the problem very simple, and then inferences are deduced from them.

(3) Powerful:

It is a powerful method of analysis for deducing conclusions from certain facts. As pointed out by Cairnes, The method of deduction is incomparably, when conducted under proper checks, the most powerful instrument of discovery ever wielded by human intelligence.

(4) Exact:

The use of statistics, mathematics and econometrics in deduction brings exactness and clarity in economic analysis. The mathematically trained economist is able to deduce inferences in a short time and make analogies with other generalisations and theories. Further, the use of the mathematical-deductive method helps in revealing inconsistencies in economic analysis.

It is a powerful method of analysis for deducing conclusions from certain facts. As pointed out by Cairnes, The method of deduction is incomparably, when conducted under proper checks, the most powerful instrument of discovery ever wielded by human intelligence.

Demerits of Deductive Method:

Despite these merits, much criticism has been levelled against this method by the Historical School which flourished in Germany.

1 .Unrealistic Assumption:

Every hypothesis is based on a set of assumptions. When a hypothesis is tested, assumptions are indirectly tested by comparing their implications with facts. But when facts refute the theory based on the tested hypothesis, the assumptions are also indirectly refuted. So deduction depends upon the nature of assumptions. If they are unrealistic, in this method, economists use the ceteris paribus assumption. But other things seldom remain the same which tend to refute theories

2. Not Universally Applicable:

Often the conclusions derived from deductive reasoning are not applicable universally because the premises from which they are deduced may not hold good at all time and places. For instance, the classicists assumed in their reasoning that particular conditions prevailing in England of their times were valid universally. This supposition was wrong. Prof. Lerner, therefore, points out that the deductive method is simply “armchair analysis” which cannot be regarded as universal.

3. Incorrect Verification:

The verification of theories, generalisations or laws in economics is based on observation. And right observation depends upon data which must be correct and adequate. If a hypothesis is deduced from wrong or inadequate data, the theory will not correspond with facts and will be refuted. For instance, the generalisations of the classicists were based on inadequate data and their theories were refuted. As pointed out by ircholson, “the great danger of the deductive method lies in the natural aversion to the labour of verification.”

Conclusion:

The above analysis reveals that independently neither deduction nor induction is helpful in scientific enquiry. In reality, both deduction and induction are related to each other because of some facts. They are the two forms of logic that are complementary and co-relative and help establish the truth.

Marshall also supported the complementary nature of the two methods when he quoted Schmoller: “Induction and deduction are both needed for scientific thought as the right and left foot are needed for walking.” And then Marshall stressed the need and use of integrating these methods.

Now-a-days, economists are combining induction and deduction in their studies of economic phenomena in various fields for arriving at generalisations from observed facts and for the indirect verification of hypotheses. They are using the two methods to confirm the conclusions drawn through deduction by inductive reasoning and vice versa. Thus true progress in economic enquiries can be made by a wise combination of deduction and induction.

What are the basic methods of analysis used by Economists? Briefly and convincingly discuss each of them.

Answers

The basic methods of analysis used by economists are

1.Deductive method.

2. Inductive method.

1. Deductive method

The deductive method is also called abstract, analytical and a priori method and represents an abstract approach to the derivation of economic generalisations and theories.

The principal steps in the process of deriving economic generalisations through deductive logic are:

(a) Perception of the problem to be enquired into;

(b) Defining precisely the technical terms and making appropriate assumptions, often called postulates or premises;

(c) Deducing hypotheses, that is, deriving conclusions from the premises through the process of logical reasoning; and

(d) Testing of hypothesis deduced.

2. Inductive Method

The inductive method which is also called empirical method derives economic generalisations on the basis of experience and observations. In this method detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalisations which follow from the observations collected.

There are three ways which can be used for deriving economic principles and theories.

They are:

(a) Experimentation,

(b) observations,

(c) statistical or econometric method.

Uwakwe Esther Chekwube,pure and industrial chemistry,2019/242747, uwakweestherchekwube@gmail.com

The methods are inductive and Deductive method.

Deductive method/priori reasoning:here,we start from unchallenged elementary and arrive at conclusions using logical analysis or our own analytical abilities.The stages in this method are observation of a task/issue, making the hypothesis, testing the hypothesis using more observation.also,it is a simple method , doesn’t involve the use of any complex software analysis.

Inductive method: flow from facts to theory,we collect information and facts and then move towards providing evidence using economic theory and facts.this method formulates principles using the sub method_observation.The stages in this method are observation, formulation of a hypothesis, Generalizing principles, verifying against actual facts.Also it is more realistic and reliable.

METHOD OF ANNALYSIS

1. DEDUCTIVE METHOD

2. INDUCTIVE METHOD

1. DEDUCTIVE METHOD:It is also called abstract analytical and proir method and represent an abstract approach. Precisely the technical terms and making of assumptions, deducing hypothesis and testing the hypothesis is also a process followed in deductive method .

Then by logical reason they arrive at certain conclusions

2. INDUCTIVE METHOD:It Involves observation and measures of deriving economic generalization in the basis of experience and they also use econometric method of observation. In the inductive methods facts are collected and conclusions are drawn.

NAME: Okenwa Eunice Chiyere

REG NO:2020/242140

EMAIL ADDRESS: chiyereeunice@gmail.com

DEPT: Business Education

COURSE:Eco 101

TOPIC:BASIC METHOD OF ANALYSIS USED BY ECONOMIST

*Deductive method

*Indecuctive method

DEDUCTIVE METHOD

It is also abstract , analytical and prior method and represents an abstract approach to the derivation of economics generalization and theories.The staages involved are:

-observation of a task

-making the hypothesis

-testing the hypothesis using more observation.

ADVANTAGES OF DEDUCTIVE METHOD

*it is a simple method,and doesn’t involve the use of any complex software analysis ,only simple deductive logic is needed.

DISADVANTAGE OF DEDUCTIVE METHOD

In this method of reasoning which started from assumption,thus if the assumptions is logically flawed the whole process become faulty and would give wrong conclusions.

INDECUCTIVE METHOD

In this method reasoning flows from fact of theory.Firstly, collecting information and facts and then moving forward to providing evidence using economic theory and facts.the stages are:

*Observation

*Formation of a hypothesis

*Generalizing principles

*Verifying against actual facts

ADVANTAGES OF INDUCTIVE METHOD

-It is more realistic and reliable

-using statical method and experimentation process are scientifically more acceptable than just our own reasoning and logic

DISADVANTAGE OF INDUCTIVE METHOD

-It is time-consuming and also expensive

Collection of data is not easy and varies from person to person.As to how the data is collected.

.

Method of economic analysis

(1)Deductive method or prior reasoning it starts from unchallenged elementary or rudimentary assumption /facts and then arrive at conclusions (building a hypothesis or theory) using logical analysis or our own analytical abilities.

Observation of a task /issues

-making the hypothesis

-testing the hypothesis using more observation.

-This reasoning gives us a hypothesis and if this hypothesis get verified we get general economics principles or law

Inductive method

This type of reasoning flows from facts of theory, first we collect information and facts and then move towards providing evidence using economic theory and facts, this method formulates principles using the sub-method observation, experimentation,statistical method.

Stages in these inductive method

1.Observation

2.Formulation of hypothesis

3.Generalizing principles

2.Verifying against actual facts.

NAME: EGWIM CHINONSO THERESA

DEPARTMENT: ECONOMICS

LEVEL:100 LEVEL

EMAIL ADDRESS: egwimtheresa2@gmail.com

METHODS OF ECONOMICS ANALYSIS

An economic theory derives laws or generalizations through two methods namely;

1. Deductive method

2.inductive method

1.DEDUCTIVE METHOD OF ECONOMICS ANALYSIS

The deductive method is also named as analytical, abstract or prior method. The deductive method consists in deriving conclusions from general truths,takes few general principles and applies them and draw conclusions.

For instance,if we accept the general preposition that man is entirely motivated by self interest. In applying the deductive method of economics analysis, we proceed from general to particular.

STEPS OF DEDUCTIVE METHOD

The main steps are;

1. Perception of the problem to be inquired into.

2. Clearly defining the one technical terms and analysis.

3. Deducing hypothesis from the assumptions.

4. Testing of hypothesis; before establishing laws or generalizations, hypothesis should be verified through direct observations of events in the rear world and through statistical methods.

This is the simple and easiest way in deriving economic theories.

2. INDUCTIVE METHOD OF ECONOMIC ANALYSIS.

This is also called “empirical method” was adopted by the “historical school of economists”. It involves the process of reasoning from particular facts to general principles.

This methods derives economic generalizations on the basis of ;

i. Experimentation ii. Observations iii. Statistical methods.

In this method,data is collected about a certain economic phenomenon .These are systematically arranged and the general conclusions are drawn from them.

For example: we observe 200 persons in the market. We find that nearly 195 persons buy from the cheapest shops. Out of the 5 which remains, 4 persons buy local products at a higher rate just to patronise their own products,while the fifth is a fool.

From the observation,we can easily draw conclusions that people like to buy from a cheaper shop unless they are guided by patriotism or they are devoid of common sense.

STEPS OF INDUCTIVE METHOD

1. Observation

2. Formation of hypothesis.

3. Generalization.

4. Verification

The above analysis reveals that both the methods have weaknesses.we cannot rely exclusively on any one of them .

Modern economists are of the view that both these methods are complimentary .They are partners and not rivals.

ALFRED MARSHALL rightly said :”inductive and deductive method are both needed for scientific thought,as the right and left foot are both needed for walking”. We can apply any of them or both as the situation demand.

NAME: Abonyi Ifebuche Faith

Jamb reg no: 20691720BA

Email: ifebuchefaith51@gmail.com

Firstly, Economic analysis can be defined as a process by which economic laws, generalizations and theories are found. There are two basic methods of economic analysis, namely;

1.. DEDUCTIVE METHOD: Deductive reasoning,also known as priori, analytical or hypothetical reasoning make analysis based on assumptions and generalizations which precede from general to particular until a theory is made and established.

EXAMPLE:All valuable goods are expensive, diamond is a valuable good, therefore,diamond is expensive. Below are the steps:

1. Observation of an issue/problem: The economist must have a clear idea of what the problem is.

2. Definition of the technical terms and making assumptions: These assumptions are made on careful observations over time. They are called POSTULATES or PREMISES.

3. Hypothesis: hypothesis are made from observations. Note that hypothesis can be either NULL or ALTERNATE.

4.Test: Lastly, you test your hypothesis using statistical method.

⚫Advantages:It is simple,precise, less expensive, less time consuming and helps in deriving economic theories.

⚫Disadvantages:It depends highly on assumptions and varies from time to time and place to place.

2.. INDUCTIVE METHOD: The inductive method which makes use of data-induced experiments, observations and statistics, involves the process of reasoning which transcends from general to particular. BACON described it as an ascending order.

EXAMPLE:If tomatoes is a perishable goods and most tomatoes I have bought are sold cheap, then all perishable goods are sold cheap. Below is the step by step procedure;

1️⃣ perception of the problem

2️⃣collection of data/facts

3️⃣Making of observations for a period of time

4️⃣Making of Hypothesis.

5️⃣Testing and Generalization.

⚫Advantages:It is based on factual data, it is dynamic

⚫Disadvantages:It uses insufficient data for a large general purpose, its expensive to run, it’s tedious and time consuming.

Name: LIVINUS MURNA

Department: Economics

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Email: livinusmurna7@gmail.com

TYPES OF ACCOUNTING

i.Tax accounting:is the subsector of accounting that deals with the preparation of tax returns and tax payments.Tax accounting is used by individuals, businesses, corporations and other entities.Tax accounting for an individual focuses on income, qualifying deductions, donations and any investment gains or losses.

ii Financial accounting:is a specific branch of accounting involving a process of recording, summarizing and reporting the myriad of transactions resulting from business operations over a period of time…work opportunities for a financial accountant can be found in both the public and private sectors.

iii.Mansgerial accounting:is the practice of identifying, measuring, analysing, interpreting and communicating financial informations to managers it helps a business Pursue it’s goals by doing all this and communicating it to the manager.

This are the major types of accounting but we have some other ones like forensic accounting,cost accounting, project accounting, Government accounting e.t.c, with their various uses and importance

NAME:AYOGU FREDRICK CHIBUIKE

REG NO: 2019/242710

DEPT: PURE AND INDUSTRIAL CHEMISTRY

COURSE CODE:ECO 101

COURSE TITLE: PRINCIPLE OF ECONOMICS

QUESTION: TWO METHODS OF ECONOMIC ANALYSIS

There are two methods of reasoning in theoretical economics. They are the deductive and inductive methods.

As a matter of fact, deduction and induction are the two forms of logic that help to establish the truth.

The Deductive Method:

Deduction Means reasoning or inference from the general to the particular or from the universal to the individual. The deductive method derives new conclusions from fundamental assumptions or from truth established by other methods. It involves the process of reasoning from certain laws or principles, which are assumed to be true, to the analysis of facts.

Then inferences are drawn which are verified against observed facts. Bacon described deduction as a “descending process” in which we proceed from a general principle to its consequences. Mill characterised it as a priori method, while others called it abstract and analytical.

Deduction involves four steps: (1) Selecting the problem. (2) The formulation of assumptions on the basis of which the problem is to be explored. (3) The formulation of hypothesis through the process of logical reasoning whereby inferences are drawn. (4) Verifying the hypothesis. These steps are discussed as under.

(1) Selecting the problem:

The problem which an investigator selects for enquiry must be stated clearly. It may be very wide like poverty, unemployment, inflation, etc. or narrow relating to an industry. The narrower the problem the better it would be to conduct the enquiry.

(2) Formulating Assumptions:

The next step in deduction is the framing of assumptions which are the basis of hypothesis. To be fruitful for enquiry, the assumption must be general. In any economic enquiry, more than one set of assumptions should be made in terms of which a hypothesis may be formulated.

(3) Formulating Hypothesis:

The next step is to formulate a hypothesis on the basis of logical reasoning whereby conclusions are drawn from the propositions. This is done in two ways: First, through logical deduction. If and because relationships (p) and (q) all exist, then this necessarily implies that relationship (r) exists as well. Mathematics is mostly used in these methods of logical deduction.

(4) Testing and Verifying the Hypothesis:

The final step in the deductive method is to test and verify the hypothesis. For this purpose, economists now use statistical and econometric methods. Verification consists in confirming whether the hypothesis is in agreement with facts. A hypothesis is true or not can be verified by observation and experiment. Since economics is concerned with human behaviour, there are problems in making observation and testing a hypothesis.

For example, the hypothesis that firms always attempt to maximise profits, rests upon the observation that some firms do behave in this way. This premise is based on a priori knowledge which will continue to be accepted so long as conclusions deduced from it are consistent with the facts. So the hypothesis stands verified. If the hypothesis is not confirmed, it can be argued that the hypothesis was correct but the results are contradictory due to special circumstances.

Under these conditions, the hypothesis may turn out to the wrong. In economics, most hypotheses remain unverified because of the complexity of factors involved in human behaviour which, in turn, depend upon social, political and economic factors. Moreover, controlled experiments in a laboratory are not possible in economics. So the majority of hypotheses remain untested and unverified in economics.

Merits of Deductive Method:

The deductive method has many advantages.

(1) Real:

It is the method of “intellectual experiment,” according to Boulding. Since the actual world is very complicated, “what we do is to postulate in our own minds economic systems which are simpler than reality but more easy to grasp. We then work out the relationship in these simplified systems and by introducing more and more complete assumptions, finally work up to the consideration of reality itself.” Thus, this method is nearer to reality.

(2) Simple:

The deductive method is simple because it is analytical. It involves abstraction and simplifies a complex problem by dividing it into component parts. Further, the hypothetical conditions are so chosen as to make the problem very simple, and then inferences are deduced from them.

(3) Powerful:

It is a powerful method of analysis for deducing conclusions from certain facts. As pointed out by Cairnes, The method of deduction is incomparably, when conducted under proper checks, the most powerful instrument of discovery ever wielded by human intelligence.

(4) Exact:

The use of statistics, mathematics and econometrics in deduction brings exactness and clarity in economic analysis. The mathematically trained economist is able to deduce inferences in a short time and make analogies with other generalisations and theories. Further, the use of the mathematical-deductive method helps in revealing inconsistencies in economic analysis.

(5) Indispensable:

The use of deductive method is indispensable in sciences like economics where experimentation is not possible. As pointed out by Gide and Rist, “In a science like political economy, where experiment is practically impossible, abstraction and analysis afford the only means of escape from those other influences which complicate the problem so much.”

(6) Universal:

The deductive method helps in drawing inferences which are of universal validity because they are based on general principles, such as the law of diminishing returns.

Demerits of Deductive Method:

Despite these merits, much criticism has been levelled against this method by the Historical School which flourished in Germany.

1 .Unrealistic Assumption:

Every hypothesis is based on a set of assumptions. When a hypothesis is tested, assumptions are indirectly tested by comparing their implications with facts. But when facts refute the theory based on the tested hypothesis, the assumptions are also indirectly refuted. So deduction depends upon the nature of assumptions. If they are unrealistic, in this method, economists use the ceteris paribus assumption. But other things seldom remain the same which tend to refute theories.

2. Not Universally Applicable:

Often the conclusions derived from deductive reasoning are not applicable universally because the premises from which they are deduced may not hold good at all time and places. For instance, the classicists assumed in their reasoning that particular conditions prevailing in England of their times were valid universally. This supposition was wrong. Prof. Lerner, therefore, points out that the deductive method is simply “armchair analysis” which cannot be regarded as universal.

3. Incorrect Verification:

The verification of theories, generalisations or laws in economics is based on observation. And right observation depends upon data which must be correct and adequate. If a hypothesis is deduced from wrong or inadequate data, the theory will not correspond with facts and will be refuted. For instance, the generalisations of the classicists were based on inadequate data and their theories were refuted. As pointed out by ircholson, “the great danger of the deductive method lies in the natural aversion to the labour of verification.

4. Abstract Method:

The deductive method is highly abstract and requires great skill in drawing inferences for various premises. Due to the complexity of certain economic problems, it becomes difficult to apply this method even at the hands of an expert researcher. More so, when he uses mathematics or econometrics.

5. Static Method:

This method of analysis is based on the assumption that economic conditions remain constant. But economic conditions are continuously changing. Thus this is a static method which fails to make correct analysis.

6. Intellectually:

The chief defect of the deductive method “lies in the fact that those who follow this method may be absorbed in the framing of intellectual toys and the real world may be forgotten in the intellectual gymnastics and mathematical treatment.

The Inductive Method:

Induction “is the process of reasoning from a part to the whole, from particulars to generals or from the individual to the universal.” Bacon described it as “an ascending process” in which facts are collected, arranged and then general conclusions are drawn.

The inductive method was employed in economics by the German Historical School which sought to develop economics wholly from historical research. The historical or inductive method expects the economist to be primarily an economic historian who should first collect material, draw gereralisations, and verify the conclusions by applying them to subsequent events. For this, it uses statistical methods. The Engel’s Law of Family Expenditure and the Malthusian Theory of Population have been derived from inductive reasoning.

The inductive method involves the following steps:

1. The Problem:

In order to arrive at a generalisation concerning an economic phenomenon, the problem should be properly selected and clearly stated.

2. Data:

The second step is the collection, enumeration, classification and analysis of data by using appropriate statistical techniques.

3. Observation:

Data are used to make observation about particular facts concerning the problem.

4. Generalisation:

On the basis of observation, generalisation is logically derived which establishes a general truth from particular facts.

Thus induction is the process in which we arrive at a generalisation on the basis of particular observed facts.

The best example of inductive reasoning in economics is the formulation of the generalisation of diminishing returns. When a Scottish farmer found that in the cultivation of his field an increase in the amount of labour and capital spent on it was bringing in less than proportionate returns year after year, an economist observed such instances in the case of a number of other farms, and then he arrived at the generalisation that is known as the Law of Diminishing Returns.

Merits of Inductive Method:

The chief merits of this method are as follows:

(1) Realistic:

The inductive method is realistic because it is based on facts and explains them as they actually are. It is concrete and synthetic because it deals with the subject as a whole and does not divide it into component parts artificially

(2) Future Enquiries:

Induction helps in future enquiries. By discovering and providing general principles, induction helps future investigations. Once a generalisation is established, it becomes the starting point of future enquiries.

(3) Statistical Method:

The inductive method makes use of the statistical method. This has made significant improvements in the application of induction for analysing economic problems of wide range. In particular, the collection of data by governmental and private agencies or macro variables, like national income, general prices, consumption, saving, total employment, etc., has increased the value of this method and helped governments to formulate economic policies pertaining to the removal of poverty, inequalities, underdevelopment, etc.

(4) Dynamic:

The inductive method is dynamic. In this, changing economic phenomena can be analysed on the basis of experiences, conclusions can be drawn, and appropriate remedial measures can be taken. Thus, induction suggests new problems to pure theory for their solution from time to time.

(5) Histrico-Relative:

A generalisation drawn under the inductive method is often histrico-relative in economics. Since it is drawn from a particular historical situation, it cannot be applied to all situations unless they are exactly similar. For instance, India and America differ in their factor endowments. Therefore, it would be wrong to apply the industrial policy which was followed in America in the late nineteenth century to present day India. Thus, the inductive method has the merit of applying generalisations only to related situations or phenomena.

Demerits of Inductive Method:

However, the inductive method is not without its weaknesses which are discussed below.

(1) Misenterpretation of Data:

Induction relies on statistical numbers for analysis that “can be misused and misinterpreted when the assumptions which are required for their use are forgotten.”

(2) Uncertain Conclusions:

Boulding points out that “statistical information can only give us propositions whose truth is more or less probable it can never give us certainty.”

(3) Lacks Concreteness:

Definitions, sources and methods used in statistical analysis differ from investigator to investigator even for the same problem, as for instance in the case of national income accounts. Thus, statistical techniques lack concreteness.

(4) Costly Method:

The inductive method is not only time-consuming but also costly. It involves detailed and painstaking processes of collection, classification, analyses and interpretation of data on the part of trained and expert investigators and analysts

(5) Difficult to Prove Hypothesis:

Again the use of statistics in induction cannot prove a hypothesis. It can only show that the hypothesis is not inconsistent with the known facts. In reality, collection of data is not illuminating unless it is related to a hypothesis.

(6) Controlled Experimentation not Possible in Economics:

Besides the statistical method, the other method used in induction is of controlled experimentation. This method is extremely useful in natural and physical sciences which deal with matter. But unlike the natural sciences, there is little scope for experimentation in economics because economics deals with human behaviour which differs from person to person and from place to place.

Further, economic phenomena are very complex as they relate to man who does not act rationally. Some of his actions are also bound by the legal and social institutions of the society in which he lives. Thus, the scope for controlled experiments in inductive economics is very little. As pointed Out by Friendman, “The absence of controlled experiments in economics renders the weeding out of unsuccessful hypo-these slow and difficult.”

Conclusion:

The above analysis reveals that independently neither deduction nor induction is helpful in scientific enquiry. In reality, both deduction and induction are related to each other because of some facts. They are the two forms of logic that are complementary and co-relative and help establish the truth.

Marshall also supported the complementary nature of the two methods when he quoted Schmoller: “Induction and deduction are both needed for scientific thought as the right and left foot are needed for walking.” And then Marshall stressed the need and use of integrating these methods.

Now-a-days, economists are combining induction and deduction in their studies of economic phenomena in various fields for arriving at generalisations from observed facts and for the indirect verification of hypotheses. They are using the two methods to confirm the conclusions drawn through deduction by inductive reasoning and vice versa. Thus true progress in economic enquiries can be made by a wise combination of deduction and induction.

Methods of Economic Analysis:

An economic theory derives laws or generalizations through two methods:

(1) Deductive Method and (2) Inductive Method.

These two ways of deriving economic generalizations are now explained in brief:

(1) Deductive Method of Economic Analysis:

The classical and neo-classical school of economists notably, Ricardo, Senior, Cairnes, J.S. Mill, Malthus, Marshall, Pigou, applied the deductive method in their economic investigations.

Steps of Deductive Method:

The main steps involved in deductive logic are as under:

Merits of Deductive Method:

The main merits of deductive method are as under:

(i) This method is near to reality. It is less time consuming and less expensive.

(ii) The use of mathematical techniques in deducing theories of economics brings exactness and clarity in economic analysis.

(iii) There being limited scope of experimentation, the method helps in deriving economic theories.

(iv) The method is simple because it is analytical.

Demerits of Deductive Method:

It is true that deductive method is simple and precise, underlying assumptions are valid.

(i) The deductive method is simple and precise only if the underlying assumptions are valid. More often the assumptions turn out to be based on half truths or have no relation to reality. The conclusions drawn from such assumptions will, therefore, be misleading.

(ii) Professor Learner describes the deductive method as ‘armchair’ analysis. According to him, the premises from which inferences are drawn may not

hold good at all times, and places. As such deductive reasoning is not applicable universally.

(iii) The deductive method is highly abstract. It require; a great deal of care to avoid bad logic or faulty economic reasoning.

As the deductive method employed by the classical and neo-classical economists led to many facile conclusions due to reliance on imperfect and incorrect assumptions, therefore, under the German Historical School of economists, a sharp reaction began against this method. They advocated a more realistic method for economic analysis known as inductive method.

(2) Inductive Method of Economic Analysis:

For example, we observe 200 persons in the market. We find that nearly 195 persons buy from the cheapest shops, Out of the 5 which remains, 4 persons buy local products even at higher rate just to patronize their own products, while the fifth is a fool. From this observation, we can easily draw conclusions that people like to buy from a cheaper shop unless they are guided by patriotism or they are devoid of commonsense.

Steps of Inductive Method:

The main steps involved in the application of inductive method are:

(i) Observation.

(ii) Formation of hypothesis.

(iii) Generalization.

(iv) Verification.

Merits of Inductive Method:

(i) It is based on facts as such the method is realistic.

(iv) Induction method also helps in future investigations.

Demerits of Inductive Method:

The main weaknesses of this method are as under:

(i) If conclusions drawn from insufficient data, the generalizations obtained may be faulty.

(iii) The inductive method is time-consuming and expensive

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Economics analysis in most cases involves the formation of laws and this can be achieved by the methods

1.Deductive Reasoning

2.inductive Reasoning

Deductive reasoning_also known as priori reasoning,involves the observation of issues, making and testing hypothesis using more observation and if generally acceptable becomes an economic law…

Inductive Reasoning_it is a fact, information and theories are gathered and tested on through observation result and experiment and obtained result may or may not be verified.this method is more reliable since it is based on fact and statistical methods are used in this approach,it is time consuming and expensive and can be affected by limited data sources.

Economic analysis involves the formulation of laws and generalizations through two methods:This reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws.

1) Deductive and

2) Inductive.

Methods of Economic Analysis

DEDUCTIVE METHOD

This is also called an abstract, analytical and a priori reasoning/method and represents an abstract approach to the derivation of economic generalisations and theories. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

i) Observation of a task/ issue

ii) Making the hypothesis

iii) Testing the hypothesis using more observations, etc.

The principal steps in the process of deriving economic generalisations through deductive logic are:

a) Perception of the Problem:

b) Definition of technical terms and making of assumptions

c) Deducing hypotheses and through logical deduction

d) Testing or verification of hypotheses.

Advantages of Deductive MethodData is collected about a particular economic theory and then conclusions are drawn. The stages in this method are:

1) It is a simple method, doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

2) This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

Disadvantages of Deductive Method

1) In this method of reasoning we start from assumptions, thus, if the assumptions happen to be logically flawed the whole process becomes faulty and would give wrong conclusions. Thus, the logical fallacy is a disadvantage of this method.

INDUCTIVE METHOD

The Inductive method is also called empirical method derives economic generalisation on the basis of experience and observations.This type of reasoning flows from facts to theory.

First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods:

i) Observations

ii) Experimentations

iii) Statistical methods.

i) Observation

ii) Formulation of a hypothesis

iii) Generalizing principles

iv) Verifying against actual facts.

Advantages of Inductive Method

1) Since it is based on facts it is more realistic and reliable.

2) Using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

3) Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

Disadvantages of Inductive Method

1) If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

2) It is a time-consuming process and thus expensive as well.

3) The collection of all the data is not an easy job and varies from person to person. As to how they collect data.

Methods of economic analysis

We have two most important methods of economic analysis they are ;

1.) Deductive reasoning : This is a fundamental structure of valid reasoning. It initiates with a general statement or hypothesis and examines the possibilities to reach a specific, logical conclusion. Deductive reasoning works from the more specific. We might begin with thinking up a theory about our topic of interest . We then narrow that down into more specific hypothesis that we can test . We narrow down even further when we collect observations to address the hypothesis. This ultimately leads us to be able to test the hypothesis with specific data , a confirmation of our original theories.

Example

Example:

Let there be 360 degrees in circle – (A general assumption)

There are four right angles in circle – (A logical argument)

Therefore this right angle has 90 degrees – (A particular conclusion)

2.) Inductive reasoning : this seeks lane generalization from specific observations. In essence there is data and then conclusions are drawn from the data. We begin with specific observations and measures, begin to detect patterns and regularities , formulate some tentative hypothesis that we can explore, and finally end up developing some general conclusions or theories.

Example

Example:

This apple falls to the ground. (A particular observation)

All apples fall to the ground. (More observations)

All objects attract each other. (A general explanation)

Name: Igboji Divinegift Onyinyechi

Reg. No.: 20006946IA

Email address: igbojidivinegift@gmail.com

There are two basic methods of analysis used by economists. They are:

(1) The Deductive method

(2) The Inductive method

The Deductive method: This method is also known as analytical, abstract or prior method. Deductive method of deriving economic generalizations consists in deriving conclusions from general truths. The principle steps in deriving economic generalizations includes: (a) Perception of the problem to be inquired into. (b) Definition of technical terms and making of realistic assumptions that is verifyable and precise. (c) Deducing hypothesis from the assumption or premises taken. (d) Testing or verification of the above deduced hypothesis.

The Inductive method: This method derives economic generalizations on the basis of experience and observations. It is also known as empirical method, which involves the process of reasoning from particular facts to general principles. The steps of Inductive method includes: (a) observation (b) formation of hypothesis (c) generalization (d) verification.

There are two methods of economic analysis:

A. Deductive Method

The deductive method, also known as analytical or abstract method, consists of deriving conclusions from general truths and principles. This type of approach is concerned with developing an hypothesis based on existing theory and then designing a research strategy to test the hypothesis. It explores a known theory or phenomenon and verifies if that theory is valid in certain circumstances.

A deductive method follows the following steps:

1. There must be a precise or clear idea of the problem

2. Defining the technical terms used in the analysis and making logical assumptions.

3. Making or deducing hypothesis from the assumptions taken.

4. Lastly, testing or verifying the hypothesis through direct observations of areas and statistical methods.

Merits:

1. The method is less time consuming and less expensive.

2. It is a simple and analytical method.

3. It uses mathematical techniques in developing theories which brings exactness and clarity in economic analysis.

Demerits:

1. This method is precise only if the assumptions are valid. Sometimes, the assumptions turn out to be based on half truths or have no relation to reality. Therefore, the conclusions from the assumptions will be misleading.

2. It is highly abstract. It needs a lot of care to avoid bad logic or faulty economic reasoning.

B. Inductive Method

The inductive method, also known as empirical method, involves the process of reasoning from particular facts to general principles. It derives generalizations from experiments, observations and statistical methods. Here, data is collected on a particular economic phenomenon. They are systematically arranged and general conclusions are drawn from them. For instance, we observe 50 people in the market. We find out that 45 persons buy foreign product’s irrespective of it’s high rate just to patronize them while the remaining 5 persons settle for local product’s because they are cheaper. From this observation, we conclude that people like to buy foreign product’s as long as their income rate is above their purchasing power. There are steps to conducting this method:

1. Making Observations

2. Forming hypothesis

3. Generalizations

4. Making verifications

Merits:

1. It is based on facts which makes it realistic

2. It makes use of statistical techniques which makes it more reliable.

3. The method is dynamic. As economic phenomenon changes, they are analyzed and on the basis of collected data, conclusions and solutions are drawn from them.

Demerits:

1. It is time consuming and expensive.

2. Collection of data is not easy.

3. If the conclusions are gotten from sufficient data, the generalizations obtained may be faulty.

Reg no: 22244035DA

Name: Livinus Murna

Department: Economics

Reg no: 20686117JF

Email: livinusmurna7@gmail.com

METHODS OF ECONOMIC ANALYSIS:

Deductive reasoning: Deductive reasoning is a basic form of valid reasoning.Deductive reasoning or deduction,starts out with a general statement,or hypothesis,and examines the possibilities to reach a specific, logical conclusion.

The deductive methods are:

Observation of a tasks/issue

Making the hypothesis

Testing the hypothesis using more observations.

Advantages of Deductive reasoning

It is a simple method, and doesn’t include the use of any complex software analysis, only simple deductive logic is required.

This method is important for economists as it focuses upon economic reasoning which is kind of paramount importance.

Disadvantages of Deductive reasoning

In this method of reasoning, we start from assumptions, thus, if the assumptions happen to be logically failed, the whole process becomes faulty and would give wrong conclusions.

INDCTIVE REASONING: Inductive reasoning is a type of logical thinking that involves forming generalizations based on specific incidents you’ve experienced, observations you’ve made,or facts you know to be true or false.

Examples of inductive reasoning:

*: Jennifer always leaves for school at 7:00am, Jennifer is always on time

*:The cost of goods was $1.00

*:Every windstorm in this area comes from the north

Advantages of inductive reasoning

Since it is based on facts, it is more reclufia and reliable using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally.

Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusion

Disadvantages of inductive reasoning

If the data used is insufficient and faulty, it would lead to faulty conclusions, making the hypothesis less reliable

It is time consuming and thus expensive as well

The collection of all the data is not easy and varies individually.

Uguwuonah joy Ifunaya

Reg no:2019/244617

Methods of Economic Analysis: Deductive Method and Inductive Method Some of the most important methods of economic analysis are as follows: 1. Deductive Method 2. Inductive Method.

Economic generalisations describe the laws or statements of tendencies in various branches of economics such as production, consumption, exchange and distribution of income. In the view of Robbins, economic generalisations or laws are statements of uniformities which describe human behaviour in the allocation of scarce resources between alternative ends.

The generalisations of economics like the laws of other sciences, state cause and effect relationships between variables and describe those economic hypotheses which have been found consistent with facts or, in other words, have been found to be true by empirical evidence. But a distinction may be drawn between a generalisation (law) and a theory. A law or generalisation just describes the relationship between variables; it does not provide any explanation of the described relation. On the other hand, a theory provides an explanation of the stated relation between the variables, that is, it brings out the logical basis of the generalisation. An economic theory or a model derives a generalisation through process of logical reasoning and explains the conditions under which the stated generalisation will hold true.

1. Deductive Method:

Generalisations in economics have been derived in two ways:

(1) Deductive Method,

(2) Inductive Method. The principal steps in the process of deriving economic generalisations through deductive logic are:

(a) Perception of the problem to be enquired into;

(b) Defining precisely the technical terms and making appropriate assumptions, often called postulates or premises; The principal steps in the process of deriving economic generalisations through deductive logic are:

(a) Perception of the problem to be enquired into;

(b) Defining precisely the technical terms and making appropriate assumptions, often called postulates or premises; 2. Inductive Method:

The inductive method which is also called empirical method derives economic generalisations on the basis of experience and observations. In this method detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalisations which follow from the observations collected.

But, it is worth mentioning that the number of observations has to be large if it can yield a valid economic generalisation. One should not generalise on the basis of a very few observations. There are three ways which can be used for deriving economic principles and theories.

They are:

(a) Experimentation,

(b) observations,

(c) statistical or econometric method.

As has been mentioned above, the experimentation, that is, the use of contrived experiments is of limited applicability in economics. First, unlike natural sciences which are concerned with analysing the behaviour of either inanimate objects or obedient animals such as rats and rabbits under the influence of chloroform, economics deals with the behaviour of man who is quite fickle, wayward and unmanageable.

Besides, man cannot tolerate the idea of being experimented upon, either individually or collectively. Secondly, an economic phenomenon is the result of multiplicity of factors and causes acting and interacting upon each other.

Therefore, economic phenomenon does not repeat itself in the same uniform pattern. Numerous factors acting on an economic phenomenon ‘disturb’ it and make its exact repetition unlikely. Thus, as compared with the natural phenomena, economic phenomena are of less uniform pattern, less repetitive and more variable.

Thirdly, economists study the economic phenomena in which pressure groups such as employers’ associations, trade unions, farming lobby, political parties with their different ideologies play a crucial part and their activities render it difficult to make controlled experiments in the economic world. However, in spite of these difficulties, experimental method can be used in some fields.

For instance, experiments have been conducted to find out which law of production is valid, that is, whether law of diminishing returns, law of constant returns or law of increasing returns operates in the real world. Besides, public undertakings or big industrial firms often try to assess the effect of the changes in the prices of their products on the demand for it and thus find out the demand elasticity of their products Evaluation of Inductive Method:

As has been explained above, observations of facts through collection of detailed data and the use of statistical methods to arrive at economic generalisations establishing relationship between facts are being increasingly made.

Some of the recent researches in the field of macroeconomics, such as the nature of consumption function describing the relation between income and consumption, the principle of acceleration describing the factors which determine investment in the economy have been obtained through the use of mainly inductive method.

However, it needs to be emphasised again that the use of induction or empirical method is not of much value if it is not supported by the economic hypothesis or theory developed by deductive logic. The inductive method can at best be used to empirically test the theory or hypothesis as to whether it is consistent with or refuted by facts.

The inductive method has another limitation in that there is a great risk of conclusions being drawn from insufficient data. To obtain generalisations through inductive method, one should take care that sufficient number of observations or data has been taken into account.

Besides, the collection of data itself is also not an easy task. And a researcher who wants to employ the inductive method to arrive at generalisations must have good knowledge of statistical methods, that is, he must know the art of collecting, processing and interpreting data. It is obvious that as compared with the deductive method, the inductive method is time-consuming and expensive.

NAME: AMAEFULE RAPHEAL IZUCHUKWU

REG NO:21353407EF

EMAIL: amaefuleraphael2002@gmail.com

METHODS OF ECONOMIC ANALYSIS

There are basic methods of reasoning in Theoretical Economics which are the Deductive and Inductive methods.As a matter of fact, these forms of logic are complementary and co-relative which help to establish the truth. The two methods will be briefly and convincingly discussed in the subsequent paragraphs below.

-Deductive Methods:This is a method of economic analysis which involves reasoning that moves from the general to the specific ,a descending process,in which a conclusion follows necessarily from the inferences presented ,so that the conclusion cannot be false if the inferences are true. The inferences drawn are verified against observed facts. It sole aims at testing an existing theory. It involves;

*Selecting the problem because the narrower it is the more the study,

*Formulating assumptions which serves as a basis of forming hypothesis,

*Formulating hypothesis,

*Testing and verifying the hypothesis.

-Inductive Methods:This is a method of economic analysis termed to be an “ascending process” which involves the derivation of general principles or theories from specific instances or observations. It aims at developing a theory. It involves;

*Collection, classification and analysing data using statistics techniques,

*Data are then used to make observations about particular facts concerning the problem,

*On the basis of observations, generalisation is logically derived which establishes a general truth from particular facts.

This method brings about exactness and clarity in economic analysis with the use of Mathematics, Statistics and Econometrics.

Economics can be a very “deductive subject” as Economists are used to constructing complicated models of human behaviour which will begin with a number of assumptions. However,Economics is also an “empirical subject”,using deductive and Inductive methods to explain observed facts. However,In practice,it can be very difficult to say where deduction ends, induction begins as one cannot leave his study in order to formulate theories because if the study is being left the success of analysing the problem cannot be possible.

The deductive method of economic analysis is static in nature i.e assumption that economic conditions remain constant,while the Inductive methods seems to be dynamic as it suggests new problems to pure theory for their solution time to time. The deductive method is a simple one because it is analytical as it divides complex problems to component parts while the Inductive method is costly and time consuming.

The world’s best Deducers are also keen observers of human behaviour and so, Economists need to use both deduction and induction in their work

ABAMUCHE LINDA C.

REG. NO.: 2019/SD/37674

QUESTIONS

1) What are the difference between macroeconomic and microeconomics?

2) Discuss the three different ways of computing GDP.

3) Without diagrams, clearly discuss the circular flow of income and product in a 2 – sector economy, 3 – sector economy and 4 – sector economy.

Macroeconomics is the branch of economics dealing with the performance, structure, behaviour and decision making of an economy as a whole. For example, using interest rates, taxes and the government spending to regulate an economy’s growth and stability. While micro economics is a branch of economics that studies the behaviour of individual unit such as households, individuals and enterprises within the economy.

Differences between Macro Economics and Micro Economics

S/N Macro economics Micro economics

1 Macro economics is the study of the whole economy Micro economics is the study of particular market

2 it loose at aggregate variables such as aggregate demand national output It looks at issues such as consumer behaviour, individual labour markets and the theory of firm.

3 macro economics is complex due to the study of large group micro economics analysis is simple

4 problems related to whole economy like employment public finance national income are included in its scope law related to marginal analysis are included in its scope.

5 it provides the information relating to national income, total output, total consumption and general price level it provides the information relating to the individual prices, individual consumption and production.

2. DISCUSS THE THREE DIFFERENT WAYS OF COMPUTING GDP.

1. Expenditure approach

2. Income approach

3. Output approach

1) Expenditure approach: This is the most widely used approach for estimating GDP, which is a measure of the economy’s output produced within a country’s borders irrespective of who owns the means of production. The GDP under this method is calculated by summing up all of the expenditures made on final goods and services.

2) Income Approach: This method comprise of the income generated from the basic factors of production or is been calculated by adding up all the factor incomes to the factors of production in the society, which includes land, labour, capital entrepreneurship or organisation. The production unit are divided into different sectors, income is calculated for each sector and summed up to arrive at net domestic product.

3) The output approach focuses on finding the total output of a nation by directly finding the total value of all goods and services a nation produces. Because of the complication of the multiple stages in the production of a good or service, only the final value of a goods or services is included in the total output.

CIRCULAR FLOW IN A SIMPLE 2 – SECTOR ECONOMY

2 – sectors flow in circular economy flow in its basic form, looking at a simple economy which is made up of only households and firms. This is a two sector economy with no government. The factors owns (households) in turn spend all of their income on goods which leads to a circular flow of income and also it is assumed that all production is done by firms and the firms sell all their entire output to consumer as soon as it produced.

3 – SECTOR (CIRCULAR WITH SAVING AND INVESTMENT)

In the flow diagram, the clockwise arrows showing the flow of goods and services have been removed just to simplify the diagram, they are new 2 parts ways along which expenditures travel on their way from household to product market. Some household income is use for consumption expenditure and reaches the product market directly; other household income is directed to savings.

4 – SECTOR FLOW WITH GOVERNMENT

They are now 2 new channels along which funds can flows from households to product market. The government take in revenue from taxes they made from household, some of the revenue immediately returns to the household in form of transfer payment. Funds flow household to government as net taxes and then from government to product market as government purchase.

Name: John okechukwu james

REG no: 21445019hf

DEPT: Social Science Education ( Education Economics)

Email: sponkybrown3@gmail.com

Title : Method of Economics Analysis

An Economics theory derives laws or generalization through this method (I) Deductive method and (II) Inductive method.

1) Deductive method of Economics analysis : the deductive method consist in deriving conclusion from general truth, takes few general principles and applies them draw conclusion. Deductive method is also named as analytical , abstract or prior method.

Steps of deductive methods;

* perception of the problem

* Defining of terms

* Deducing hypothesis from the assumptions

* Testing of hypothesis

Merits of Deductive method

1. the method is near to reality ,it is less time consuming and less expensive

2. the use of mathematical techniques in deductive theories of economics brings exactness and clarity in economics analysis

3. there is been limited scope of experimentation, the method helps in deriving economics theories.

Demerit of economics method;

* the deductive method is highly abstract. it require a great deal of care to avoid bad logic or faulty economics reasoning

* the deductive method is simply and precise only if thr underlying assumption are valid.

Inductive method of Economics analysis(ii) In order to test the economic principles, method makes statistical techniques. The inductive method is, therefore, more reliable.

This method derives economics generalization on the basic of

1) Experimentation 2) Observation and 3) Statistical method

Steps of Inductive method

* Observation

* Formation of hypothesis

* Generalization

* Verification

Merit of Inductive method;

1) is based on facts as such the method is realistic

(iii) Inductive method is dynamic.

(iv) Induction method also helps in future investigations.

Demerit of Inductive method;

i) If conclusions drawn from insufficient data, the generalizations obtained may be faulty.

(ii) The collection of data itself is not an easy task.

(iii) The inductive method is time-consuming and expensive.

OKAFOR CHIOMA NANCY

REG. NO : 2020/242649

DEPARTMENT: ECONOMICS

Email : nancyokafor2000@gmail.com

METHODS OF ECONOMIC ANALYSIS

Economic analysis is simply the study of economic systems.The analysis aims to determine how effectively the economy or something within it is operating.

There are two major methods of economic analysis and they are – DEDUCTIVE AND INDUCTIVE method-

1. INDUCTIVE METHOD: This method is also known as empirical method. in this method, observations are combined with experiential information to reach a conclusion, meaning that when faced with specific sets of data we make reasonable conclusions based on existing knowledge we’ve had from previous experience.

2. DEDUCTIVE METHOD: This method is also known as priori method. In this method,we start from raw facts or assumptions and build a hypothesis or theory using basic analytical tools in order to arrive at a conclusion. This method focuses on economic reasoning as hypothesis will have to be deduced and tested before any assumption can become a theory.

NAME: OMEKE PRECIOUS OGECHI

REG. NO: 2020/243294

DEPARTMENT: PUBLIC ADMINISTRATION AND

LOCAL GOVERNMENT

FACULTY: SOCIAL SCIENCE

COURSE CODE: ECO 101

ECONOMIC ANALYSIS

Economic analysis is the study of economic system which is the study of a production process or an industry.

Economic analysis is all about analysing the economic aspects of things.

METHODS OF ECONOMIC ANALYSIS

There are two basic methods of economic analysis they are:- Deductive and Inductive reasonings or methods.

DEDUCTIVE METHOD

Deductive method is also called an abstract, analytical and prior reasonings. The analysis start from unchallenged elementary or rudimentary facts or assumption and then arrive at a conclusion using logical analysis or one personal analytical truths.

STEPS OF DEDUCTIVE METHOD/ REASONING

1) Identify the problem: You need to know the problem in other to get the solution.

2) Make assumptions.

3) Logical deduction to derive implications

4) Formulation or making of hypothesis.

5) Make predictions and test the hypothesis deduced using more observation.

6) Predictions are in agreement with facts.

“Deductive reasoning gives us hypothesis and if the hypothesis gets verified we have general economic principles of law.”

This method also has advantages and disadvantages.

INDUCTIVE METHOD

Inductive method is also known as empirical method. This method is a type of reasoning that flows from facts to theory. First of all, there will be a collection of information or facts and then providing of evidence using economic theory and facts. Inductive method derives economic analysis on the basis of experience and observation. Inductive method formulates principles using sub – methods. they are:- Observation, Experimentations and statistical methods.

STEPS IN INDUCTIVE METHODS

1) Identify the problem.

2) Define the technical terms and alterables related to the problem found.

3) Collection of datas about the variables related to the problem.

4) Procession of the data collected to find out how the variables are related.

5) Make predictions or foretale and test them.

6) Predictions are in agreement with facts.

There are also advantages and disadvantages of Inductive method.

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Reg. No: 20684723DF

Dpet: Nursing Sciences

What are the basic methods of analysis used by Economists?

An economist is a person or an expect in the study of the reasoning behind people decisions-making and have interest in data usage to conduct research that leads to boost profits or create a better public policy. In order to achieve its purpose, an economist apply some basic methods of analysis. These include the following;

1. Deductive method of analysis and

2. Inductive method of analysis

Briefly and convincingly discuss each of them

Deductive method of analysis

This is the method of analysis applying a kind of reasoning that goes from general to specific. It refers to priori reasoning. In this method, one observes a particular task or issue at hand, makes hypothesis and test the hypothesis using more observations. This analysis do not involve using any complex computer software analysis but only simple deductive logic is required to complete the task. However, as this method of reasoning begins from assumptions, when such assumptions are logically flawed, a wrong conclusions will be given.

Inductive method of analysis

This analysis uses data collected about a specific theory in economic to draw a conclusion. That is, inductive type of reasoning flows from some facts to a theory. The process involves observation, formulation of a hypothesis, generalizing principles and verifying against actual facts. This method of analysis by economist is more realistic and reliable because it is based on facts. However, when such analysis use insufficient and faulty data, it will result to a faulty conclusions.

Okechi Francis Uche

2020/242648

okechif0@gmail.com

Method of Economic Analysis

Economics analysis are done major by;

1. Deductive method

2. Inductive method

Deductive methodThis is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

1. Observation of a task/ issue

2. Making the hypothesis

3. Testing the hypothesis using more observations, etc.

Advantages of Deductive Method

1. It is a simple method

2. It doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

3. This method is important for economic reasoning which is of paramount importance.

Disadvantages of Deductive Method

In this method we start from assumptions, thus, if the assumptions happen to be logically flawed the whole process becomes faulty and would give wrong conclusions. Thus, the logical fallacy is a disadvantage of this method.

Inductive MethodData is collected about a particular economic theory and then conclusions are drawn. The stages in this method are:

This type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods. We make use of econometerc ackages in this method.

1. Observation

2. Formulation of a hypothesis

3. Generalizing principles

4. Verifying against actual facts.

Advantages of Inductive Method

1. Since it is based on facts it is more realistic and reliable.

2. Using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

3. Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

Disadvantages of Inductive Method

1. If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

2. It is a time consuming process and thus expensive as well.

3. The collection of all the data is not an easy job and varies from person to person. As to how they collect data.

Name:Magbo Chidimma Joy

Matric/Reg no: 2020/242674

Department: Economics Education

Course Code: Eco 101

Course title: principles of Economic

Email joychidimma961@gmail.com

Basic method of Analysis used by Economics are:

Deductive Method

Inductive Method

Explanation

1 Deductive Method: This is also called a prior reasoning. It starts from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusion ( building hypothesis using logical analyze or out own analysis or ablities. In this kind of reasoning we go from general to specific.

Stage in deductive Method are

1 observations on a task/ issue

2 making the hypothesis

3 Testing the hypothesis using more observation

Advantages of Deductive Method

1 it is a simple method, it doesn’t involve the uses of any complex software analysis.

2 This methods focuses more on Economic reasoning which is of paramount importance to Economists

Disadvantages of Deductive Method

i the method of reasoning start from assumptions thus if the assumptions is logical flawed the whole process becomes Faulty and would give wrong conclusion.

2 Inductive Method: This methods of reasoning flows from facts to theory. This method formulates principles using this sub-method: observations, Experimations, statistical method.

The stages in this method are:

i Observation

ii Formulation of hypothesis.

iii Generalising principles

iv Verifying against actual facts

Advantages of inductive Method

i since it is based on facts it is more realiable

ii using statistica methods and experimentation makes the process more scientific this making it more universally acceptable

Disadvantages of inductive Method

i The collection of all the data is not an easy Job and varies from person. As to how they collect data

ii it is time consuming and thus expensive as well

Name : Charles ThankGod Ekenedilichukwu

Reg Number : 2020/242137

Email : thankgodcharles65@yahoo.com

Course code : Eco 101

Department : Business Education.

Basic method of economic analysis :

Deductive reasoning simply mean logical thinking that starts with a general idea (premises) from general to specific and reaches a specific conclusion . An example using deductive reasoning :

1) all human being can breath

2) Mr emeka can breath

3) therefore , Mr emeka is a human being .

Inductive reasoning is a method that involves drawing one’s experience , observation, conclusion from specific observation to general . Further more, inductive reasoning involves the following steps :

First ,observe the figures , look for similarities and difference.

2) Generalise these observation.

3) predict the figures .

ABAMUCHE AGATHA NKIRU

REG. NO.: 2019/SD/37673

Question

1) What are the difference between macroeconomic and microeconomics?

2) Discuss the three different ways of computing GDP.

3) Without diagrams, clearly discuss the circular flow of income and product in a 2 – sector economy, 3 – sector economy and 4 – sector economy.

Micro economics is the study of indivisible units of an economy. It is also the study of an economy in a disaggregated form while macro economics is the branch of economics concerned with large-scale or general economic factors, such as interest rates and national productivity.

DIFFERENCES BETWEEN MICRO AND MACRO ECONOMICS

S/N Micro Macro

1 micro economics studies the income of an individual macro economics studies about the national income

2 micro economics concerns itself decisions of individuals and business decision macro analyzes the decisions that are made by countries and government.

3 micro economics adopts a bottom-up approach. It focuses on the demand and the supply and other forces that play out in the price levels macro economics adopts a top down approach. It looks into the policies and decisions that influence the direction taken by other players in the economy

4 micro economics engages in the study of the behaviours of individuals forms, and households in a given with regards to how they make both ends meet macro economics looks at the economy in its entirely. It examines how the various forces interact and engage at a larger level like the region, the nation and the entire globe.

5 investors can use micro economics in the investment decision macro economics is an analytical tool mainly used to craft economic and fiscal policy

The expenditure approach

The output approach or production

The income approach

The expenditure approach also known as spending approach calculates spending by eth different groups that participate in the economy. The U.S. is primarily measured based on the expenditure approach.

The approach can be calculated using the following formula

GDP = C + G + I + NX

Where

C = consumption

G = government spending

I = Investment

NX = net exports

The output or production Approach: The production approach is essentially the reverse of the expenditure approach. Instead of measuring the input costs that contribute to economic activity, the production approach estimates the total value of economic output and deducts the cost of intermediate goods that are consumed in the process.

The Income Approach: The income approach represents a kind of middle ground between the two other approaches to calculate GDP. The income approach calculates the income earned by all the factors of production in an economy.

THE CIRCULAR FLOW IN A SIMPLE (2 SECTOR) ECONOMY

In this type of economy, it is assumed that household spend all their incomes on consumer’s goods as soon as the income is received. All consumption is assured to take place in the household. This means that the business sector does not consume finished goods. It is also assumed that all production is done by firms and the firms sell all their entire output to consumers as soon as it is produced.

CIRCULAR FLOW WITH SAVINGS AND INVESTMENT (3 – SECTOR) ECONOMY

Some household income is use for consumption expenditure and reaches the product market directly, other household income is indirected to savings and this is a source of funds for firms to use in making investment expenditure. The income reaches product market directly. On the way from household to firms, the flow of savings pass through a set of financial market.

CIRCULAR FLOW WITH GOVERNMENT (4 – SECTOR)

The government take in revenue from taxes they made from households, some of the revenue immediately returns to the household in the form of transfer payment. The government collect tax as revenue and pay out as transfer payment and it is called net taxes. Funds flows from household to government as net taxes and then from government to product market as government purchases.

Name: ogbonna chinecherem Rita

Reg no: 20155373IF

Dept: social science education

Unit: economics education

Course code: Eco 101

Email: ogbonnachinecheremrita@gmail.com

Economics analysis involves the formulation of law and generalisations through two methods thus: DEDUCTIVE AND INDUCTIVE REASONING.

1. Deductive method: it is a process of drawing conclusions based on the premises genaraly accepted and assumed to be true,it uses only information assumed to be correct and accurate not based on feelings and emotions,it is also called abstract, analytical and a prior method.steps to take before drawing conclusions, there are four steps in drawing conclusion through deductive method 1. Perception of the problem: the Economist must have a clear and vivid idea of the problem to be solved 2. Defining technical terms and making assumptions: you have to define terms to be used and make some clear assumptions concerning to the problem to be solved 3. Deducing hypothesis: the Economist have to draw hypothesis gotten from the assumption made 4. Testing hypothesis: the hypothesis gotten from the assumption made must be verified tested and undergo series of experiments before generalizing or going into conclusion

Example of deductive method/reasoning thus: all birds have feathers,all robins are bird therefore,robins have feathers.

2. Inductive method: it is a method of reasoning in which the premises are viewed as supplying evidence with no full assurance but drawing conclusion from a state a set of specific observation example 1. All black dogs I have seen are wicked therefore all black dogs are wicked this is a weak arguments because they are also black dogs that are not wicked, so we make it stronger by putting it under probability thus all black dogs I have seen are wicked therefore most black dogs are probably wicked. inductive reasoning is used everyday to build an understanding of the world, inductive reasoning is also known as historical methods in economics analysis.

What are the basic methods of analysis used by Economists?

An economist is a person or an expect in the study of the reasoning behind people decisions-making and have interest in data usage to conduct research that leads to boost profits or create a better public policy. In order to achieve its purpose, an economist apply some basic methods of analysis. These include the following;

1. Deductive method of analysis and

2. Inductive method of analysis

Briefly and convincingly discuss each of them

Deductive method of analysis

This is the method of analysis applying a kind of reasoning that goes from general to specific. It refers to priori reasoning. In this method, one observes a particular task or issue at hand, makes hypothesis and test the hypothesis using more observations. This analysis do not involve using any complex computer software analysis but only simple deductive logic is required to complete the task. However, as this method of reasoning begins from assumptions, when such assumptions are logically flawed, a wrong conclusions will be given.

Inductive method of analysis

This analysis uses data collected about a specific theory in economic to draw a conclusion. That is, inductive type of reasoning flows from some facts to a theory. The process involves observation, formulation of a hypothesis, generalizing principles and verifying against actual facts. This method of analysis by economist is more realistic and reliable because it is based on facts. However, when such analysis use insufficient and faulty data, it will result to a faulty conclusions.

Economic Analysis

Any economic analysis involves the formulation of laws and generalizations through two methods- deductive and inductive.This is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

This reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws.

It is a simple method, doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

In this method of reasoning we start from assumptions, thus, if the assumptions happen to be logically flawed the whole process becomes faulty and would give wrong conclusions. Thus, the logical fallacy is a disadvantage of this method.

This type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods.

Data is collected about a particular economic theory and then conclusions are drawn. The stages in this method are:

Using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

The collection of all the data is not an easy job and varies from person to person. As to how they collect data.

Methods of Economic Analysis

Deductive Method

Observation of a task/ issue

Making the hypothesis

Testing the hypothesis using more observations, etc.

Advantages of Deductive Method

Disadvantages of Deductive Method

Deductive And Inductive Methods

Inductive Method

Observation

Formulation of a hypothesis

Generalizing principles

Verifying against actual facts.

Advantages of Inductive Method

Since it is based on facts it is more realistic and reliable.

Disadvantages of Inductive Method

It is a time-consuming process and thus expensive as well.

NAME-Edeh loveth ifeoma

Department- combined social science

( economic/political science)

MATRIC Number- 2020/242988

Email- ifeomaloveth33@gmail.com

METHOD OF ECONOMIC ANALYSIS

1; DEDUCTIVE METHOD- we shall first explain the Deductive method of deriving economic generalisation. The Deductive method is also called abstract, analytical and a prior method and represent an abstract approach to the derivation of economic generalisation and theories. With the aid of rigorous mathematical logic, economic theories can be developed through the process of deduction which can successfully explain economic phenomena.through Deductive logic useful economic theories can be derived without collection and analysis of data which are required under inductive method,this as compared to inductive method deduction is less time consuming and less expensive. The sophisticated mathematical method in the Deductive approach enables the economist to introduce accuracy and exactness in economic principle and theories.

2; INDUCTIVE METHOD- This inductive method which is also called empirical method derived economic generalisation on the basic of experience observation.

In this method detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalisation which follow from the observation collected. The main step involved in the application of inductive method are

Observation

Formation of hypothesis

Generalisation

Verification

Inductive method is based on fact as such the method is realistic and this method is dynamic, the changing economic phenomenon are analyzed and on the collected data.conclusion and solution are drawn from them and this method also help in future investigation.

NAME:MAMAH FAITH OKWUKWE

DEPARTMENT:ECONOMICS

REG NO:20644865BF

EMAIL ADDRESS: http://www.mamahokwukwe24@gmail.com

METHODS OF ECONOMIC ANALYSIS:

The methods used in analyzing the relationship between two variables with the use of economic research are:

*Deductive method

*Inductive method

*DEDUCTIVE METHOD:

This is an abstract approach to the derivation of economic generalizations and theories.

STEPS INVOLVED IN DEDUCTIVE METHOD

*The analyst or theorist should perceive and observe the problem to be enquired into, have a clear understanding of it and try to present it in such a way that it awakens people’s curiosity.

*The theorist should define clearly,precisely and unambiguously the technical terms as well as make appropriate and indisputable postulates through the observations.

*The analyst should deduce a hypothesis, deriving conclusions from the postulate through the process of logical reasoning.

*The economist should test the deduced hypothesis by uncontrolled experience so as to know if the hypothesis is an alternate or nol hypothesis.

The merit of this method is that it facilitates economic reasoning and does not involve complex software analysis. The demerit is that if it’s assumption is logically flawed, the whole process becomes faulty.

INDUCTIVE METHOD:

This is a method that encomprises of collecting data and facts about the significant variables whose interrelationship and behaviour he wants to derive generalization, provide evidence and back up using economic theories.

STEPS INVOLVED IN INDUCTIVE METHOD ARE:

*The theorist should perceive and observe the problem to be enquired into.

*The theorist should define the technical terms clearly.

*The theorist should collect all data about the particular economic theory and make assumptions.

*The analyst should form a hypothesis.

*The analyst should draw conclusions and verify them with reference to actual facts and the behaviour of the economy.

The merit is that it is more reliable since it is based on fact, it is highly practical, it is helpful in verifying the conclusion of deductive logic etc.

The demerit is that it consumes time, data collection is not easy since it varies from person to person, mere Inductive method cannot do the job alone (it also needs deductive method).

NAME: Ugwuanyi Sunday Chetachi

REG. NO: 20686711HA

DEPARTMENT: Public Administration And Local Government

COURSE CODE: Eco.101

COURSE TITLE: Principles of Economics

Question: What are the basic methods of analysis used by Economists? Briefly and convincingly discuss each of them.

Basically, in Economic analysis theories obtain generalizations or laws through two methods;

A. Deductive method or Analytical Abstract method

B. Inductive method or Empirical method

DEDUCTIVE METHOD

This method of economic of Economic Analysis reach conclusion by taking and applying general or wildly accepted principles. it consists of gaining conclusions from general truth;

there are several steps involved in deductive Analysis. they include:

I. perception of the problem to be inquired into.

II. defining of terms

III. deducing hypothesis from the assumption.

iv. testing of hypothesis

This method is less time consuming and less expensive. it brings exactness and clarity in economic analysis due to the use of mathematical techniques.

On the other hand, the deductive method is highly abstract. it requires a great deal of care to avoid bad logic or faulty economic reasoning.

INDUCTIVE METHOD OR EMPIRICAL METHOD

This method entails the process of reasoning from particular facts to general principles. it was adopted by the historical school of Economists.

In this method of Economic Analysis, Economic generalization is gained on the basis of the following;

i. experimentation

ii.observations

iii.statistical methods.

There are four main steps involved in this method, which include; observation, formation of hypothesis, Generalization and verification.

this method is realistic due to the fact that it is based on facts. it is also dynamic and reliable. On the other hand, this method is time-consuming and expensive. Generalization obtained through this method may be faulty if the conclusion is drawn from insufficient data.

Name:Eze Immaculeta Ebubechi

Dept:public administration and local government

Reg number:20679439EF

1)Inductive method:This method flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principle using the sub-method-observation, experiments, statistical methods. Data is collected about a particular economic theory and then conclusions are drawn. The stages in the method are:

Observation

Formulation of hypothesis

Generalizing principles

Verifying against actual facts.

2:Deductive methods: This is also called prior reasoning. We start from unchallengeably elementary or rudimentary assumptions/facts and then arrive at conclusion( build a hypothesis or theory) using logical analysis or own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

Observation of a task or issue

Making hypothesis

Testing the hypothesis using more observations..

Etc

Name: Okoloaja Vanessa Mmerichukwu

Reg no:21320516FF

Email: Mmerichukwunessa77@gmail.com

1. Deductive method: The deductive of economic analysis also known deductive logic entails the movement from general to particular reasoning,it is also known as an hypothetical method . The deductive reasoning provides generalisation that must have been tested and verified in order to have relevance to the facts. There are various steps in deductive logic (identify the problem,defining the technical terms, deducing hypotheses and testing or verification of hypotheses )

Advantages:

1. Deductive method is easy to comprehend : Looking at the law of utility, law of demand and other theories,it is a self evident that we can easily draw conclusions from the theories

2. It gives accruacy and exactness: In generalisation, deductive logic gives a very high standard of precision in abstract economic reasoning.

Disadvantage:

1. The deductive logic has its own drawback because of its too much abstraction, thereby having little or no connection to real

2. Inductive: The method moves from particular to general reasoning, it is carried out in two forms, experimentation and statistical forms. The statistical branch of inductive reasoning plays a greater role on economic investigation, looking at the Malthusian theory of population (Rev. Thomas Malthus) he used statistics to show relationship between (food to population and population to food)

Advantages:

1. It is highly practical and realistic

2. It is helpful in verifying conclusions

Disdavantage:

1. Collection of facts in the inductive logic is difficult and complicated.

In conclusion, the two methods should not be used for competition but should be used to complement each other in the discipline of economics.

Name: Ogenyi Deborah Oluchi

Reg no: 20645428FA

Email: debbyluchi01@gmail .com

There are two basic method of analysing used by economist and dey are ;

1) Deductive method: This is also a priori reasoning we start from unchallenged elementary or rudimentary assumptions or fact and then arrive at conclusions using logical analysis orourvown analytical abilities in the kind of reasoning, we go from general to specific.

2) Inductive method: This type of reasoning flows from fact to theory. first, we collect information and fact and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-method Observation, experiments, statistical methods.

NAME:ONYEFULU CHIAMAKA LILIAN

MATRICULATION NUMBER: 2018/250299

DEPARTMENT: NURSING SCIENCES

FACULTY: HEALTH SCIENCES AND TECHNOLOGY

QUESTIONS: METHODS OF ECONOMICS ANALYSIS

Economic analysis: can be defined as an economic operation that involves the formulation of laws

There are basically two methods of economics analysis

1. Deductive method

2. Inductive method

DEDUCTIVE METHOD: Is also called abstract, analytical and prior method and represents an abstract approach to derivation of economics generalization through deductive logic

STEPS USED IN DEDUCTIVE METHOD OF ECONOMICS ANALYSIS

1. Perception of the problem: In any scientific research, the analyst must have a clear idea of the problem to be researched on. There must be liable variables in which his generalization will depend on.

2. Precise definition of technical terms and making assumptions: This involves simple definition of various technical terms related and to be used in the analysis and this clearly states the assumptions. Assumptions maybe behavioral pertaining to the behavior of the economics variables.

3. Deduction of hypotheses: Hypotheses are deduced from the assumptions or premises taken, Hypothesis explains relationships between factors affecting a phenomenon.

4. Testing of deduced d hypotheses: This means checking, analyzing and lastly verification of the hypothesis, when verified it can be established as generalization.

INDUCTIVE METHOD OF ECONOMICS ANALYSIS:- It can also be called empirical method, it serves economics generalization based on experiences and observations. It does not accommodate few observations, It can only be done when large observations has been made, it uses statistical or econometric methods.

STEPS USED IN INDUCTIVE METHOD OF ECONOMICS ANALYSIS

1. Perception of the problem: In any scientific research, the economist must have a clear idea of the problem-to be researched on. There must be liable variables in which his generalization will depend on.

2. Precise definition of technical terms and making assumptions: This involves simple definition of various technical terms related and to be used in the analysis and this clearly states the assumptions. Assumptions can also be called postulate

3. Collection of data: There will be collection of data about the variables related to the problems, as to gather large observations for the analysis.

4. Processing of data collected: Finding out the relations between variables and doing some preliminary thinking ways to relate and the variables.

5. Deduction of hypotheses: Hypotheses are deduced from the assumptions or premises taken, Hypothesis explains relationships between factors affecting a phenomenon, it shows clearly the relationship that correlates.

6. Testing of deduced d hypotheses: This means checking, analyzing and lastly verification of the hypothesis, when verified it can be established as generalization.

METHODS OF ANALYSIS USED BY ECONOMISTS.

These are the deductive and inductive method.

1.Deductive method: is also called priori method, aimed at testing theories and it represents an abstract approach to the derivation of economics generalizations. Sometimes this approach is informally called a top down. it is associated with quantitative research. Deductive involves;

1. Selection or perception of the problem

2. The formulation of assumptions on the basis of which the problem is to be explored.

3. The formulation of hypothesis through the process of logical reasoning, whereby influences are drawn.

4. Verifying the hypothesis.

Deductive method has its negative and positive sides; the positive: it is real, simple, Powerful, exact, indispensable and universal.The negative side: it is an unrealistic assumption, incorrect verifications, abstracts method. The supply and demand analysis is an example of deductive reasoning because it comprises of generally accepted principles about supply and demand. In conclusion, deductive method starts with a generally accepted principle and proceeds to the specific.

2. Inductive method: this concept is normally based on claims that knowledge is built primarily from an observer’s experiences and interactions with phenomena. Inductive research begin with a research question and the collection of empirical data which are used to generate hypothesis and theory. In inductive method we use econometrics packages to run experiments such as E-views, STdata etc.

The method of processing the data collected and finding out what relates between the variables that actually holds.This will result in the development of a further refined and tested method known as statistical method. Inductive reasoning begins with specific observations, patterns are drawn from the observations and then generalized, the generalization are then combined to form a general conclusion.

NAME. OGUANYA CHIDERA FAITH

DEP ECONOMICS

REG NO.21462736DA

chideraoguanya@gmail.com

BASIC METHODS OF ECONOMIC ANALYSIS

1. Deductive method.

2. Inductive method.

Deductive- also known as the abstract method, analytical approach and a priori method. It represents an abstract approach to the derivation of economic generalization and theories. The principles of deriving economic generalizations through deductive logic are (a) defining precisely the technical terms and making approapiate assumptions often called postulates or premites.then the deducing hypothesis, that is deriving conclusion from the premises through the process of logical reasoning and finally the testing of hypothesis deduced.

2. Inductive- this is also called empirical method. This method derives economic generalizations on the basis of experience and observations. In this method, dedailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalizations which follows from the observations collected. The steps here are (a) Experimentation….(b) observation and statistical or econometric method.

DEPARTMENT :PHILOSOPHY.

1) Deductive method it also called a priori reasoning.it can be unchallenged elementary or rudimentary assumption or facts that arrive at a conclusions using a logical analysis or our own analytical reasoning.in this kind of abilities, we go from general to specific stages of deductive reasoning which are observation of issue,Making the theory,testing the hypothesis using more observation.The advantages of these method is that it doesn’t involve the use of complex 2)Indeductive method :it flows from facts to theory.We first collect information and facts then move towards providing evidence using economic theory and facts .this method formulates principles using the sub -methods. Advantages of Indeductive method is that,it based on facts and realistic and reliable theories.

Methods of Economic Analysis

Some of the most important methods of economic analysis are as follows:

1. Deductive Method

2. Inductive Method.

Economic generalizations describe the laws or statements of tendencies in various branches of economics such as production, consumption, exchange and distribution of income. In the view of Robbins, economic generalizations or laws are statements of uniformities which describe human behavior in the allocation of scarce resources between alternative ends.

The generalizations of economics like the laws of other sciences, state cause and effect relationships between variables and describe those economic hypotheses which have been found consistent with facts or, in other words, have been found to be true by empirical evidence. But a distinction may be drawn between a generalization (law) and a theory.

A law or generalization just describes the relationship between variables; it does not provide any explanation of the described relation. On the other hand, a theory provides an explanation of the stated relation between the variables, that is, it brings out the logical basis of the generalization. An economic theory or a model derives a generalization through process of logical reasoning and explains the conditions under which the stated generalization will hold true.

1. Deductive Method:

Genera

We shall first explain the deductive method of deriving economic generalizations. The deductive method is also called abstract, analytical and a priori method and represents an abstract approach to the derivation of economic generalizations and theories.

In any scientific enquiry, the analyst or theorist must have a clear idea of the problem to be enquired into. He must know the significant variables regarding whose behavior and interrelationship he wants to derive generalizations. The perception of the problem is by no means an easy task.

(a) Definition of Technical Terms and Making of Assumptions:

The next step in the process of deriving economic generalizations is to define precisely and unambiguously the various technical terms to be used in the analysis as well as to state clearly the assumptions he makes to derive generalizations.

As mentioned above, assumptions may be behavioral pertaining to the behavior of the economic variables or they may be technological relating to the state of technology and the factor endowments. The crucial assumptions are made on the basis of observations or introspection.

A crucial assumption that has been taken in economics is that consumers try to maximize their satisfaction and producers try to maximize their profits. Likewise, it is assumed that investors try to minimize their risk and maximize the expected rate of their profits. Some of the assumptions are made merely to simplify the analysis and may not be quite realistic.

The actual economic world is quite complex and full of details in which numerous factors play a part and act and interact on each other. The introduction of simplifying assumptions is quite necessary in order to bring out the importance of really significant factors having a bearing on the problem under investigation.

It, therefore, follows that each and every assumption made by a theory may not be realistic. The crucial factor in building up a valid theory is whether its predictions are corroborated by the facts in the world. A correct scientific theory or generalization must be expressed in the form of a hypothesis that is conceivably refutable.

(b) Deducing Hypotheses through Logical Deduction:

The next step in deriving generalizations through deductive logic is deducing hypotheses from the assumptions or premises taken. A hypothesis describes relationship between factors affecting a phenomenon; it establishes the cause and effect relationship between the variables having a bearing on the phenomenon.

Then, through logical process, hypothesis is deduced from the assumptions made. This logical reasoning may be carried out verbally or it may be conducted in symbolic terms using the language of what is known as symbolic logic.

The geometric or graphic technique is also usually employed to deduce the hypotheses about the relationship between factors. Besides, the process of logical deduction may be done with the help of more formal mathematics.

These days in almost all branches of modern economics, mathematics as tool of analysis for deriving economic theories and generalisations is being increasingly used. The use of mathematics in economic analysis proves extremely useful where geometrical methods make the analysis more complicated to comprehend. Besides, the use of mathematical method makes the derivation of economic hypotheses more rigorous and exact.

It is worthwhile to note that in deriving analytically sound hypotheses, one should guard against committing logical fallacy in the process of logical deduction. For instance, it is inappropriate to conclude that A must be the cause of B, if A happens to precede B.

Further, it is logically fallacious to argue that since there exists a high degree of correlation between the two factors, say between the supply of money and the general price level, the former must be the cause of the latter, unless the causation must be logically developed.

(c) Testing or Verification of Hypotheses:

Hypotheses obtained above have to be verified before they are established as generalizations or principles of economics. For the verification of hypotheses, economists cannot make controlled experiments, because they have to discover uniformities in behavior patterns of man.

We cannot make experiments with man under controlled conditions, such as in laboratories as physical scientists make experiments with inanimate objects of nature and biologists make these with animals and plants. Therefore, economists have to rely on uncontrolled experience and observations.

The information regarding uncontrolled experience about the behaviour patterns concerning variables about man and the economy are quite amply available. The reliance by economists on uncontrolled experiences, however, does increase the number of observations required to verify the hypotheses or to establish the generalizations.

Besides, the need to rely on uncontrolled experiences complicates the analysis and requires that facts must be carefully interpreted to discover successfully the significant relationship between relevant economic variables.

It may, however, be pointed out that in spite of the complexities and difficulties involved in verifying economic hypotheses through successful analysis and proper interpretation of uncontrolled experiences and observations, several useful and significant generalizations have been established in economics.

In the field of microeconomics, the well-established generalizations relate to the inverse relationship between price and quantity demanded, the direct relation between price and quantity supplied, the tendency of the price of the product to be equal to the marginal cost under conditions of perfect competition, and the tendency for the wages to be equal to the value of marginal product under conditions of perfect competition and several others.

In the field of macro-economics, established generalizations relate to the determination of the level of national income by aggregate demand and aggregate supply in a capitalist economy, the multiple increase in income and employment as a result of a given initial increase in investment depending upon the size of marginal propensity to consume, the dependence of the amount of investment on the marginal efficiency of capital and the rate of interest and several others.

It is worth noting that the absence of controlled experiments in economics affects the exactness of economic laws and generalizations.’ This means that the generalizations in economics are not as exact as those of physical sciences and they are therefore not universally applicable under all circumstances. Because of the absence of controlled experiments economic generalizations lack in firmness, they are not easily accepted by all and even generalizations that are refuted by empirical evidence are not abandoned for good by all.

In regard to flaming and testing of economic generalizations, two related distinctions must be borne in mind. First, functional relationship between economic variables and a historically sequence of events must be distinguished.

For instance, the law of demand stating inverse relationship between price and quantity demanded does not become invalid in view of the fact that both prices and quantities sold of many commodities increase during boom periods. This is because certain other forces such as a rise in aggregate investment demand operates which causes increase in both the price and quantity sold during a boom period.

Second, prediction of a generalization to show its validity must be carefully differentiated from the forecasting of future events; actual events may not exactly come about as predicted by a generalization and yet that generalization may be correct. This is because, as mentioned above, the actual course of events is governed by several other factors assumed by a generalization which remains constant under the qualification “other things remaining the same.

In the absence of controlled experiments, for the verification of their theories economists have to rely on the direct observations of events in the real world. By direct observations we mean. gathering of information personally or reliance on comparatively unprocessed material such as files of business firms and government departments, locally published reports, proceedings of representative assemblies, newspapers, advertisements, market reports, auction notices and the like.

In order to prove the validity of hypotheses and therefore to establish laws or generalizations, importance of direct observations cannot be underrated.

Testing of Economic Hypotheses through Statistical Methods:

In recent years a very useful method to test economic hypothesis has been developed. This is the statistical method or what is now popularly called econometric method. The statistical or econometric method to verify and establish the theoretical generalizations occupies an important place because of the limited applicability of controlled experimentation in economics.

The various statistical methods such as regression analysis have been developed to empirically test the economic hypotheses on the basis of collected economic data. The merit of econometrics is that the degree of functional relationship between relevant economic variables in precise quantitative terms is obtained by it and also the level of significance of the results can also be estimated.

Recently, econometric method has been used to establish the precise relationships between money supply and the price level, quantity of money and the national income, consumption and income, capital accumulation and rate of economic growth and so forth.

It may, however, be pointed out that statistical analysis or econometrics alone cannot be used to derive and establish economic principles and theories. Economic hypotheses or theories must be developed logically before we can meaningfully use statistical analysis to test and verify them.

Indeed, a theory or hypothesis is needed beforehand for selecting the relevant facts and data regarding relevant variables which can be subjected to empirical testing through the methods of econometrics

Facts come to mean something only as ascertained and organized in the frame of a theory. Indeed, facts as part of scientific knowledge have no existence outside such a frame Questions must be asked before answers can be obtained and, in order to make sense, the questions must be part of a logical coordinated attempt to understand social reality as a whole. A non- theoretical approach is, in strict logic, unthinkable. Principal steps followed in formulation of economic theories and generalizations through deductive method can be summarized as given below.

Merits and Demerits of Deductive Method:

The deductive approach to establish economic generalizations was extensively used by Classical and Neo-Classical economists such as Ricardo, Malthus, Senior, J. S. Mill, Marx, Marshall and Pigou. It still remains popular with modem economists as it has several merits. First, useful mathematical techniques can be employed to derive laws and theories of economics.

With the aid of rigorous mathematical logic, economic theories can be developed through the process of deduction which can successfully explain economic phenomena. Secondly, through deductive logic useful economic theories can be derived without the tenuous and detailed collection and analysis of data which are required under the inductive method.

Thus, as compared to inductive method, deduction is less time-consuming and less expensive. Thirdly, in view of the limited scope for controlled experimentation in economics, the method of deduction is extremely useful method of constructing economic theories. This is because several forces act simultaneously on an economic phenomenon and it is not possible to eliminate some of these by means of a controlled experiment.

This indicates the crucial importance of deductive logic for building up economic principles or theories. Fourthly, the use of sophisticated mathematical methods in the deductive approach enables the economists to introduce accuracy and exactness in economic principles and theories.

In spite of the above-mentioned merits, shortcomings of the deductive approach should not be overlooked. The use of deductive method in deriving economic generalizations requires the use of a high-level competence in logic and theoretical abstraction.

Besides, most economists have preconceived notions or biases on several economic issues. If sound and valid economic generalizations are to be established, economists must dissociate themselves from normative preconceptions and biases in their logical process of deducing economic generalizations.

Further, a great demerit of deductive approach is that with it highly sophisticated theoretical models based on highly unrealistic assumptions may be developed which do not have any operational significance. Indeed, such highly irrelevant analytical models with little empirical content and incapable of being used for policy formulation have in fact been developed by economists. Such models are no more than mere “intellectual toys”. If economics is to serve as an instrument of social betterment, building of such theoretical models having no operational use should be avoided.

Lastly, in the derivation of economic hypotheses and conclusions through deductive logic, assumptions play a crucial role. If the assumptions made are such that when on removing them, economic hypothesis based on them is refuted, then making of these assumptions is not valid.

Thus, one who uses deductive approach should always keep in mind to what extent the validity of generalizations derived depends on the assumptions made. For instance, the Keynesian macroeconomic analysis is based upon the assumption of a depression-ridden capitalist economy with a lot of excess productive capacity.

Therefore, a positive harm has been done in applying the Keynesian theories in the context of developing countries such as ours where the assumptions made by Keynes do not hold good. Hence, mere “deductive arm-chair analysis” should be avoided, if the scientific character of economics is to be maintained.

2. Inductive Method:

The inductive method which is also called empirical method derives economic generalizations on the basis of experience and observations. In this method detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalizations which follow from the observations collected.

But, it is worth mentioning that the number of observations has to be large if it can yield a valid economic generalization. One should not generalize on the basis of a very few observations. There are three ways which can be used for deriving economic principles and theories.

They are:

• Experimentation,

• Observations,

• statistical or econometric method.

As has been mentioned above, the experimentation, that is, the use of contrived experiments is of limited applicability in economics. First, unlike natural sciences which are concerned with analyzing the behavior of either inanimate objects or obedient animals such as rats and rabbits under the influence of chloroform, economics deals with the behavior of man who is quite fickle, wayward and unmanageable.

Besides, man cannot tolerate the idea of being experimented upon, either individually or collectively. Secondly, an economic phenomenon is the result of multiplicity of factors and causes acting and interacting upon each other.

Therefore, economic phenomenon does not repeat itself in the same uniform pattern. Numerous factors acting on an economic phenomenon ‘disturb’ it and make its exact repetition unlikely. Thus, as compared with the natural phenomena, economic phenomena are of less uniform pattern, less repetitive and more variable.

Thirdly, economists study the economic phenomena in which pressure groups such as employers’ associations, trade unions, farming lobby, political parties with their different ideologies play a crucial part and their activities render it difficult to make controlled experiments in the economic world. However, in spite of these difficulties, experimental method can be used in some fields.

For instance, experiments have been conducted to find out which law of production is valid, that is, whether law of diminishing returns, law of constant returns or law of increasing returns operates in the real world. Besides, public undertakings or big industrial firms often try to assess the effect of the changes in the prices of their products on the demand for it and thus find out the demand elasticity of their products.

Various Steps in Inductive Method:

Various steps are gone through in developing economic theories through inductive method. The first step, as in the deductive approach, is to identify the problem. The second step is defining technical terms and variables related to the problem.

It is the next step which is peculiar to the inductive method, namely, the collection of data about the variables related to the problem and doing some preliminary thinking about the possible functional relationships between the relevant variables.

The next important step in the construction of economic theories in this method is the processing of data collected and finding out what relations between the variables actually hold good. From this, a theory is developed which can be further refined and tested through statistical methods.

Once the theory has been developed one can make predictions on its basis, as is done in the deductive approach. If predictions of theory are in agreement with the facts and actual behavior of the economy, then a new reliable theory has been developed. If a new theory explains “how things work” better than the existing ones, it replaces them.

However, if predictions are in conflict with actual facts and behavior of the economy, either the theory is discarded or fresh efforts are made to modify and refine it by collecting more data and processing them. The various steps in the construction and development of economic theories through inductive method are illustrated in Figure.

Evaluation of Inductive Method:

As has been explained above, observations of facts through collection of detailed data and the use of statistical methods to arrive at economic generalizations establishing relationship between facts are being increasingly made.

Some of the recent researches in the field of macroeconomics, such as the nature of consumption function describing the relation between income and consumption, the principle of acceleration describing the factors which determine investment in the economy have been obtained through the use of mainly inductive method.

However, it needs to be emphasized again that the use of induction or empirical method is not of much value if it is not supported by the economic hypothesis or theory developed by deductive logic. The inductive method can at best be used to empirically test the theory or hypothesis as to whether it is consistent with or refuted by facts.

The inductive method has another limitation in that there is a great risk of conclusions being drawn from insufficient data. To obtain generalizations through inductive method, one should take care that sufficient number of observations or data has been taken into account.

Besides, the collection of data itself is also not an easy task. And a researcher who wants to employ the inductive method to arrive at generalizations must have good knowledge of statistical methods, that is, he must know the art of collecting, processing and interpreting data. It is obvious that as compared with the deductive method, the inductive method is time-consuming and expensive.

Conclusion: Integration of Two Methods:

Now, the controversy which existed among the earlier economists as to whether deductive or inductive approach is more appropriate in developing economic theories and principles has been resolved. The modem viewpoint in this regard is that both are needed for the proper development of scientific economic theories. Indeed, the two are complementary rather than competitive.

The modern economists first derive economic hypotheses through the process of logical deduction and then empirically test them through statistical or econometric methods. Marshall rightly pointed out, “induction and deduction are both needed for scientific thought as the right and left foot are both needed for walking.

Empirical studies made through statistical or inductive method without a theoretical hypothesis to serve as a guide for the selection of data are quite useless. The derivation of economic generalisations through the approach of deductive logic without empirically testing them through inductive method is also not quite proper.

Empirical studies made in inductive approach also bring to light significant economic facts or phenomena which require analytical explanation through deductive logic. For instance. Farm Management Studies in India in the mid- fifties led to the discovery of a fact that output per acre on the small-sized farms is higher than that on large farms.

This led to the various theoretical explanations of the phenomenon observed in the empirical studies. On the other hand, a theory or hypothesis is first developed through deductive logic from some assumptions and then predictions based on the hypothesis are tested through inductive or statistical method. If the predictions are found to be constant with facts, the hypothesis or theory stands proved and if the predictions of the theory are found to be inconsistent with facts, it stands rejected.

NAME: REMIGIUS CHIDEBERE RICHARD

REG NUMBER: 21410757AF

EMAIL: bcrichardremigius@gmail.com

FACULTY: SOCIAL SCIENCE

DEPARTMENT: ECONOMICS

METHODS OF ECONOMICS ANALYSIS

Basically Economic Analysis involves the formulation of laws and generalizations through Two {2} Methods:

{1} Deductive Method

{2} Inductive Method

Deductive Method

This is also called a priori or top-down reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions (build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific.

The Stages in Deductive Method are listed and explained belove:

1. Formulation of the Problem:

In any scientific study, the analyst must have a clear idea of the nature of the problem to be investigated (or enquired into). It is absolutely essential for the analyst or theorist to acquire knowledge of the relevant variables; the variables about whose behaviour and interrelationship he wants to make generalisations. The perception of the problem is in most cases a complex exercise.

2. Definition of Terms and Formulation of Assumptions:

Since every subject has its own language, it is necessary to define certain technical terms associated with the analysis as the second step. It is also necessary to make assumptions.

The assumptions maybe of different types, viz., technological, relating to the state of technology and factor endowments, or behavioural, relating to the actions of economic agents like consumers, factor owners, and producers.

It is not at all necessary for every assumption to be realistic. The most crucial factor in theorising is whether the predictions made by the theory are supported by the facts or observations. In the words of R. G. Lipsey: “The scientific approach to any issue consists in setting up a theory that will explain it and then seeing if that theory can be refuted by evidence.” The same point has been made by the Nobel Laureate economist Milton Friedman. He has explained the view that one should not give undue importance to the ‘realism’ of assumptions. What is most important, from the viewpoint of scientific theory, is whether it enables us to make accurate predictions.

3. Formation of Hypothesis:

The third step in making generalisations through process of logical deduction is to form a hypothesis on the basis of the assumptions made. A hypothesis is a provisional statement the truth of which is not known to us. A hypothesis just describes the relationship among factors affecting a particular phenomenon. Differently put, it establishes the cause-and-effect relationship among those variables (dependent and independent) having direct bearing on the

4. Hypothesis Testing:

The final step involved in the deductive method is hypothesis testing. Hypothesis testing refers to the development and use of statistical criteria to aid decision making about the validity of a hypothesis in uncertain conditions. In any decision about the validity of a hypothesis there is always a chance of making a correct choice and a risk of making a wrong choice.

Hypothesis testing is concerned with evaluating these chances and suggesting criteria that minimise the likelihood of making wrong decisions. Therefore, hypotheses deduced through a process of logical reasoning have to be verified. Otherwise, it is not possible to establish them as generalisations or principles of economic science.

For the testing or verifications of hypothesis economists cannot carry out controlled experiments. Therefore, economists are forced to carry out uncontrolled experiments or rely on past observations. The economic system itself generates necessary information about the behaviour pattern of human beings. Two major problems crop up as a result of uncontrolled experiments.

Advantages of Deductive Method

It is a simple method and it does not involve the use of any complex software analysis, etc. only simple deductive logic is required. This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

Disadvantages of Deductive Method

Basically, in this method of reasoning we start from assumptions, and, if the assumptions happen to be logically flawed the whole process becomes faulty and would give wrong conclusions.

{2} Inductive Method

This type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods: Observations, Experimentations, Statistical methods.

Data is collected about a particular economic theory and then conclusions are drawn.

The stages in this method are:

{1} Observation

{2} Formulation of a hypothesis

{3} Generalizing principles

{4} Verifying against actual facts.

Advantages of Inductive Method

{1} Since it is based on facts it is more realistic and reliable.

{2} Using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

{3} Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

Disadvantages of Inductive Method

{1} If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

{2} It is a time-consuming process and thus expensive as well.

{3} The collection of all the data is not an easy job and varies from person to person. As to how they collect data.

NAME: Orji Harrison Chukwuemeka

REG NUMBER: 21841174FA

EMAIL: emekavalentine20@gmail.com

METHODS OF ECONOMICS ANALYSIS

Deductive Method

This is can also be defined as priori reasoning. It start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

Making the hypothesis

Testing the hypothesis using more observations, etc.

Disadvantages of Deductive Method

Inductive Methods

Observation

Formulation of a hypothesis

Generalizing principles

Verifying against actual facts.

Advantages of Inductive MethodUsing statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

Since it is based on facts it is more realistic and reliable.

Disadvantages of Inductive MethodIf the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

The collection of all the data is not an easy job and varies from person to person. As to how they collect data.

It is a time-consuming process and thus expensive as well.

Name:Ani Chinenye Christianah

Department: Philosophy

Reg no.:21347085CA

Email: chinenyeani122@yahoo.com

Economic analysis is the evaluation of costs and benefits,it is the ranking of projects based on economic viability to aid a better allocation of resources.

They are two basic methods of economic analysis, namely Deductive and Inductive methods of analysis.

1).Deductive Method; Deductive reasoning means being able to get information from two or more statements and draw a logical conclusion.Deductive reasoning moved from generalities to specific conclusions.

There are principal steps used in the derivation of economic analysis through deductive method and they are;

A). perception of the problem to be inquired into

B). Refining of the technical terms and making appropriate assumptions

C). Deducing hypothensis which is deriving conclusions from the premises through logical reasoning

D). Testing of the hypothensis that has been deduced.

2). Inductive Methods of Analysis

Inductive Reasoning is a logical thinking process in which multiple premises that are believed to be true are combined to draw a conclusion .It works in the opposite of deductive reasoning.Inductive method unlike deductive is based on Observations.

There are three ways that can be used for deriving economics principles and they are; Experiments, Observations and Econometric methods.

WHAT ARE THE BASIC METHODS OF ANALYSIS USED BY ECONOMIST? BRIEFLY AND CONVINCING DISCUSS EACH OF THEM

The basic method of analysis used by economists are;

1-Deductive method

it can also be known as the analytical abstract,a prior method or hypothetical method,its derives the conclusion From fundamental assumption or from the truth.establish by other methods;its involves the process of reasoning from certain law or Principe which are assumed to be true to the analysis of the facts.The inference are drawn which are verified against observe facts.

2- Inductive Method

In this method the specific observation and measure,its bring to detect patterns and regulations formulate some tentative hypotheses that we can explore and finally end up developing some general conclusion or theories.in this case also the gulf can be reduce by economists that proceed from a practical angle to problem of science between practice and it’s done by two forms, experimentation and statiscal forms.

Name:Ani Chinenye Christianah

Department: Philosophy

Reg no.:21347085CA

Email: chinenyeani122@yahoo.com

Economic analysis is the evaluation of costs and benefits,it is the ranking of projects based on economic viability to aid a better allocation of resources.

The deductive method is also known as abstract, analytical and priori method and it represents an abstract approach to the derivation of economic generations.

They are two basic methods of economic analysis, namely Deductive and Inductive methods of analysis.

1).Deductive Method; Deductive reasoning means being able to get information from two or more statements and draw a logical conclusion.Deductive reasoning moved from generalities to specific conclusions.

There are principal steps used in the derivation of economic analysis through deductive method and they are;

A). perception of the problem to be inquired into

B). Refining of the technical terms and making appropriate assumptions

C). Deducing hypothensis which is deriving conclusions from the premises through logical reasoning

D). Testing of the hypothensis that has been deduced.

2). Inductive Methods of Analysis

Inductive Reasoning is a logical thinking process in which multiple premises that are believed to be true are combined to draw a conclusion .It works in the opposite of deductive reasoning.Inductive method unlike deductive is based on Observations.

There are three ways that can be used for deriving economics principles and they are; Experiments, Observations and Econometric methods.

Name: uzodiegwu Deborah chinelo

Reg no: 20874513EA

Dep: sociology and anthropology

Email: duzodiegwu@gmail.com

Methods of economic Analysis

1. Deductive method

2. Inductive method

Deductive method: deductive method is the theoretical deduction that is considered to be true without being based on observations and experience .it is also know as analytical, abstracts and priori methods

Steps used in deriving generalisation in deductive method

1. Perception of the problem to be enquired into

2. Finding precisely the technical terms

3. Deduction of hypothesis

4. Testing the hypothesis

Inductive methods: inductive methods derives economic generalisation on the basis of experience and observations. Inductive methods is also know as empirical methods and it makes use of econometric packages to run their experiment.

Theories used in generalisation of inductive methods

1. Experimentation

2.observations

3. Statistical or econometric methods

Name. Chukwuma Ogochukwu susan

Course. Eco 101

Department. Combined social science

Reg number. 2020/242910

The method of Economics analysis

Deductive method

Inductive method

Deductive method is the analytical abstract or prior method, it derives conclusion from general truth, takes few general principles and applies conclusions.

Steps in deductive method

1perception of the problem to be inquired into

2 Defining of terms

3 Deducing hypothesis

4 Testing of hypothesis

Inductive method involves the process of reasoning from particular fact to general principle, it derives economic generalization on the basis of experimentations, observations and statistical methods

Steps in inductive method

1observation

2Formation of hypothesis

3Generalization

4.Verification.

Anelechukwu precious kelechi

Reg number: 21268671CF

Email: preciousanelechukwu@gmail.com

Methods of economics Analysis are;

1)Deductive analysis

2)Inductive analysis

1) Deductive analysis: This is concerned with ” developing hypothesis (or hypotheses) based in existing theory and then designing a research strategy to test the hypothesis

It has been stated that Deductive means reasoning from the particular to the general. If a casual relationship or link did obtain on more general circumstances

Deductive approach can be explained by the means of hypothesis,which can be derived from the prepositions of the theory .In other words Deductive approach is concerned with deducting conclusions from premises or prepositions. Deductive begins with an expected pattern ” that is tested against observations whereas induction begins with observations and seeks to find a pattern within them”.

2) Inductive analysis: This refers to approaches that primarily use detailed readings of raw data to derive concepts,themes or a model through interpretations made from the raw data by a researcher. The general Inductive approach provides an easily used and systematic set of procedures for analyzing qualitative data that can produce reliable and valid findings. Although the general Inductive approach is not strong as some analytic strategies for theory or model development,it does provide a simple, straight forward approach for deriving findings in the context of focused evaluation questions. Many evaluation are likely to find using a general Inductive approach less complicated than using other approaches to qualitative data analysis.

Name: ANIH FORTUNE KENECHUKWU

Reg no:20631084EF

Faculty: Vocational and Technical Education

Department: Business Education

Email: fortunekenny111@gmail.com

METHODS OF ECONOMIC ANALYSIS

1. Inductive Method of Economic Analysis

Inductive method which also called empirical method was adopted by the “Historical School of Economists” It involves the process of reasoning from particular facts to general principle,This method derives economic generalizations on the basis of (i) Experimentations (ii) Observations and (iii) Statistical methods

In this method data is collected about a certain economic phenomenon These are systematically arranged and the general conclusions are drawn from them,For example, we observe 200 persons in the market We find that nearly 195 persons buy from the cheapest shops Out of the 5 which remains 4 persons buy local products even at higher rate just to patronize their own products while the fifth is a nonentity From this observation, we can easily draw conclusions that people like to buy from a cheaper shop unless they are guided by patriotism or they are devoid of common sense.

Steps of Inductive Method

i. Observation

ii. Formation of hypothesis

iii. Generalization

iv. Verification

Merits of Inductive Method

i. It is based on facts as such the method is realistic.

ii. In order to test the economic principles, method makes statistical techniques.

iii. Induction method also helps in future investigation.

Demerits of Inductive Method

i. If conclusions drawn from insufficient data, the generalizations obtained may be faulty.

ii. The inductive method is time-consuming and expensive.

2. Deductive Method of Economic AnalysisThe deductive method is also named as analytical, abstract or prior method. The deductive method consists in deriving conclusions from general truths, takes few general principles and applies them draw conclusions.

Steps of Deductive Method

*Perception of the problem to be inquired into

*Defining of terms

*Deducing hypothesis from the assumptions

*Testing of hypothesis

Merits of Deductive Method

i. This method is near to reality. It is less time consuming and less expensive

ii. The use of mathematical techniques in deducing theories of economics brings exactness and clarity in economic analysis

iii. The method is simple because it is analytical

Demerits of Deductive Method

i. The deductive method is simple and precise only if the underlying assumptions are valid

ii. The deductive method is highly abstract. It require; a great deal of care to avoid bad logic or faulty economic reasoning

Economic analysis involves the formulation of laws and generalization and it is achieved through the methods of Deductive Analysis and Inductive Analysis. The Deductive method also referred to as priori starts from unchallenged elementary or rudimentary assumptions and then arrives at conclusions using logical analysis or our analytical abilities. This is achieved through different stages which includes; (I) Observation of task, (ii) Making the hypothesis, and (iii) Testing the hypothesis using more observation. It is a simple method that doesn’t involve the use of any complex software analysis. Inductive method of analysis is the type that flows from facts to theory. Informations and facts are first collected and then evidence are provided using economic theory and facts. It involves other methods , namely ; observations, experimentation, and statisticalmethods in formulation of principles. Since it is based on facts, it is more realistic and reliable.

The Basic Methods of Economic Analysis used by economists are the Deductive Method and the Inductive Method.

Economic generalizations describe the laws or statements of tendencies in various branches of economics, such as production, consumption, exchange, and distribution of income. In the view of Robbins, monetary generalizations or laws are statements of uniformity which describe human behavior in the allocation of scarce resources between alternative ends.

The generalizations of economics, like the legal guidelines of other sciences, state cause and effect relationships between variables and describe these economic hypotheses which have been found consistent with facts or, in different words, have been found to be true by empirical evidence. But a distinction may also be drawn between a generalization (law) and a theory.

1. Deductive Method of Economic Analysis:

The deductive method is also called the abstract, analytical, and a priori method, and represents a summary approach to the derivation of economic generalizations and theories.

The principal steps in the process of deriving monetary generalizations through deductive logic are:

(a) Perception of the Problem:

In any scientific enquiry, the analyst or theorist must have a clear idea of the hassle to be enquired into. He must know the significant variables regarding whose conduct and interrelationship he wants to derive generalizations. The perception of the problem is by no means an easy task.

(b) Definition of Technical Terms and Making of Assumptions:

The next step in the process of deriving economic generalizations is to outline precisely and unambiguously the various technical terms to be used in the analysis, as well as to state clearly the assumptions he makes to derive generalizations.

Assumptions may be behavioral pertaining to the behavior of the financial variables or they may be technological relating to the state of technology and the endowments. The crucial assumptions are made on the basis of observations or introspection.

(c) Deducing Hypotheses through Logical Deduction:

The next step in deriving generalizations via deductive logic is deducing hypotheses from the assumptions or premises taken. A hypothesis describes the relationship between factors affecting a phenomenon; it establishes the cause and impact relationship between the variables having a bearing on the phenomenon.

Then, through a logical process, a hypothesis is deduced from the assumptions made. This logical reasoning may be carried out verbally or it may be performed in symbolic terms using the language of what is known as symbolic logic.

The geometric or graphic approach is also usually employed to deduce hypotheses about the relationship between factors. Besides, the process of logical deduction may be performed with the help of more formal mathematics.

(d) Testing or Verification of Hypotheses:

Hypotheses obtained above have to be verified earlier than they are established as generalizations or principles of economics. For the verification of hypotheses, economists can not conduct controlled experiments due to the fact that they have to discover uniformities in the behavior patterns of man.

We can not do experiments with man under controlled conditions, such as in laboratories, as physical scientists do experiments with inanimate objects of nature and biologists do them with animals and plants. Therefore, economists have to rely on uncontrolled experience and observations.

The information involving uncontrolled experience about the behavior patterns concerning variables of man and the economy is pretty amply available. The reliance by economists on uncontrolled experiences, however, does increase the number of observations required to verify the hypotheses or to set up the generalizations.

Merits and Demerits of the Deductive Method:

With the aid of rigorous mathematical logic, economic theories can be developed through the process of deduction, which can efficiently explain economic phenomena. Secondly, through deductive logic, beneficial economic theories can be derived without the tenuous and detailed collection and evaluation of data which is required under the inductive method.

Thus, as compared to the inductive method, deduction is less time-consuming and less expensive. Thirdly, in view of the limited scope for controlled experimentation in economics, the method of deduction is an extremely beneficial method of constructing economic theories. This is because a number of forces act simultaneously on an economic phenomenon and it is not possible to dispose of some of these by means of a controlled experiment.

This indicates the vital importance of deductive logic for building up economic ideas or theories. Fourthly, the use of sophisticated mathematical methods in the deductive approach enables economists to introduce accuracy and exactness into monetary principles and theories.

In spite of the above-mentioned merits, the shortcomings of the deductive approach should not be overlooked. The use of deductive techniques in deriving economic generalizations requires the use of high-level competence in logic and theoretical abstraction.

Further, a great demerit of the deductive approach is that, with it, tremendously sophisticated theoretical models based on highly unrealistic assumptions may additionally be developed which do not have any operational significance. Indeed, such highly irrelevant analytical models with little empirical content and incapable of being used for policy formulation have in fact been developed by economists. Such fashions are no more than mere “intellectual toys”. If economics is to serve as an instrument of social betterment, the building of such theoretical models having no operational use should be avoided.

Lastly, in the derivation of monetary hypotheses and conclusions through deductive logic, assumptions play a crucial role. If the assumptions made are such that when removing them, economic speculation based on them is refuted, then the making of these assumptions is not valid.

Thus, one who uses a deductive approach must always keep in mind to what extent the validity of generalizations derived depends on the assumptions made. For instance, the Keynesian macroeconomic evaluation is based upon the assumption of a depression-ridden capitalist economy with a lot of excess productive capacity.

Therefore, positive damage has been done in applying the Keynesian theories in the context of developing countries such as ours, where the assumptions made by Keynes do not hold well. Hence, mere “deductive arm-chair analysis” should be avoided, if the scientific personality of economics is to be maintained.

2. Inductive Method of Economic Analysis

The inductive method, which is also called the empirical method, derives monetary generalizations on the basis of experience and observations. In this method, detailed facts are collected with regard to a certain economic phenomenon and an effort is then made to arrive at certain generalizations which are observed from the observations collected.

But, it is worth mentioning that the number of observations has to be large if it can yield a legitimate economic generalization. One should not generalize on the basis of very few observations. There are three approaches which can be used for deriving economic principles and theories.

They are:

(a) Experimentation,

(b) observations,

(c) statistical or econometric methods.

As has been mentioned above, experimentation, that is, the use of contrived experiments, is of limited applicability in economics. First, unlike herbal sciences, which are concerned with analyzing the behavior of either inanimate objects or obedient animals such as rats and rabbits under the influence of chloroform, economics deals with the behavior of man, who is quite fickle, wayward, and unmanageable.

Besides, men can’t tolerate the idea of being experimented upon, either individually or collectively. Secondly, an economic phenomenon is the end result of a multiplicity of factors and causes acting and interacting with each other.

Therefore, financial phenomena do not repeat themselves in the same uniform pattern. Numerous factors acting on a monetary phenomenon ‘disturb’ it and make its exact repetition unlikely. Thus, as compared with natural phenomena, economic phenomena are of a much less uniform pattern, less repetitive and more variable.

Thirdly, economists study the economic phenomena in which strain groups such as employers’ associations, trade unions, farming lobby, and political parties with their different ideologies play an indispensable part. Their activities make it difficult to conduct controlled experiments in the financial world. However, in spite of these difficulties, experimental methods can be used in some fields.

For instance, experiments have been conducted to find out which law of manufacturing is valid, that is, whether the law of diminishing returns, the law of constant returns or the regulation of increasing returns operate in the real world. Besides, public undertakings or big industrial firms frequently try to assess the effect of the changes in the prices of their products on the demand for them and thus find out the demand elasticity of their products.

Various Steps in the Inductive Method:

Various steps are taken in developing economic theories through the inductive method. The first step, as in the deductive approach, is to identify the problem. The 2nd step is defining technical terms and variables related to the problem.

It is the next step which is peculiar to the inductive method, namely, the series of data about the variables related to the problem and doing some preliminary thinking about the viable functional relationships between the relevant variables.

The next important step in the development of economic theories in this method is the processing of data collected and discovering what relations between the variables actually hold. From this, a theory is developed which can be refined and tested through statistical methods.

Once the theory has been developed, one can make predictions on its basis, as is completed in the deductive approach. If predictions of the theory are in agreement with the facts and actual conduct of the economy, then a new reliable theory has been developed. If a new theory explains “how things work” better than the existing ones, it replaces them.

Evaluation of the Inductive Method:

As has been explained above, observations of facts through series of detailed data and the use of statistical methods to arrive at economic generalizations organising relationships between facts are being increasingly made.

Some of the recent research in the field of macroeconomics, such as the nature of consumption feature describing the relationship between income and consumption, and the principle of acceleration describing the factors which determine funding in the economy, have been obtained through the use of mainly inductive methods.

The inductive technique has another limitation in that there is a great risk of conclusions being drawn from inadequate data. To obtain generalizations through the inductive method, one should take care that a sufficient range of observations or data has been taken into account.

Besides, the collection of data itself is also no longer an easy task. And a researcher who wants to employ the inductive method to arrive at generalizations has to have good knowledge of statistical methods. That is, he must know the art of collecting, processing, and interpreting data. It is obvious that, as compared with the deductive method, the inductive method is time-consuming and expensive.

Economic analysis involves the formulation of laws and generalization and it is achieved through the methods of Deductive Analysis and Inductive Analysis.

The Deductive method also referred to as priori starts from unchallenged elementary or rudimentary assumptions and then arrives at conclusions using logical analysis or our analytical abilities. This is achieved through different stages which includes; (I) Observation of task, (ii) Making the hypothesis, and (iii) Testing the hypothesis using more observation. It is a simple method that doesn’t involve the use of any complex software analysis.

Inductive method of analysis is the type that flows from facts to theory. Informations and facts are first collected and then evidence are provided using economic theory and facts. It involves other methods , namely ; observations, experimentation, and statisticalmethods in formulation of principles. Since it is based on facts, it is more realistic and reliable.

Methods of economics analysis

1, deductive method :it is also called abstract analytical and priori method and it represents an abstract approach to the derivation of economics generalization and theories , here, we start with fundamental fact and after adding some assumptions ,we build a theory , in the method we proceed from general to particular

Deductive methods comprises of three stages 1, observation 2,deductive reasoning 3,instance and testing by means of further observation

Merits of deductive methods 1,it’s simple ,2,it obviates the necessity of experimentation ,3,it results in accuracy and exactness

Demerits 1,it is based mainly on assumptions ,2,there’s too much abstraction .,3,it’s generalisation started on wrong presumptions will be dangerous when such generalization claims universal validity

2, inductive method :in this method, economists proceed from a practical angle to problem of science to reduce the gulf between theory and practice . It is done in two ways, 1,experimentation and 2,statistical form . Facts are collected first , arranged and conclusions are drawn , then these general conclusion are further verified with reference to actual fact

Merits of inductive method 1, it is highly practical , it describes things as they are 2, it is helpful in verifying the conclusion of the deductive methods

Demerits of inductive methods 1, when the investigators lack a balances judgement 2,collection of facts in inductive process is highly complex and complicated job warranting extraordinary understanding to differentiate economic from non- economic factor ,3,mere induction alone will not deliver goods unless , it it supplemented by means of deductive reasoning .

In summary the two methods have to be made use of or blended to achieve the required objective . The two methods are not competitive but complementary in nature helping invigilator

WHAT ARE THE BASIC METHODS OF ANALYSIS USED BY ECONOMIST? BRIEFLY AND CONVINCING DISCUSS EACH OF THEM

The basic method of analysis used by economists are;

1-Deductive method

it can also be known as the analytical abstract,a prior method or hypothetical method,its derives the conclusion From fundamental assumption or from the truth.establish by other methods;its involves the process of reasoning from certain law or Principe which are assumed to be true to the analysis of the facts.The inference are drawn which are verified against observe facts.

2- Inductive Method

In this method the specific observation and measure,its bring to detect patterns and regulations formulate some tentative hypotheses that we can explore and finally end up developing some general conclusion or theories.in this case also the gulf can be reduce by economists that proceed from a practical angle to problem of science between practice and it’s done by two forms, experimentation and statiscal forms.

Name: Sylvanus favour chinagorom

Matric no:2020/242141

Email address :sylvanusfavourchi7@gmail.com

METHODS OF ECONOMIC ANALYSIS

Any economic analysis involves the formulation of laws and generalization.Economist use two methods in the analysis. The include:

*INDUCTIVE

*DEDUCTIVE METHODS.

*Inductive method involves the use of reasoning from particular fact to general principle. The process for this method are,observation, formulation of hypothesis, general principle, verifying against actual facts.

Deductive method of economic analysis ,we proceed from general to the particular or main facts.that is drawing conclusions for the observation made so far.

Name: ANIH FORTUNE KENECHUKWU

Reg no: 20631084EF

Faculty: Vocational and Technical Education

Department: Business Education

Email: fortunekenny111@gmail.com

METHODS OF ECONOMIC ANALYSIS

1. Inductive Method

Inductive method which also called empirical method was adopted by the “Historical School of Economists” It involves the process of reasoning from particular facts to general principle,This method derives economic generalizations on the basis of

*Experimentations

*Observations

*Statistical methods

In this method data is collected about a certain economic phenomenon These are systematically arranged and the general conclusions are drawn from them,For example, we observe 200 persons in the market We find that nearly 195 persons buy from the cheapest shops Out of the 5 which remains 4 persons buy local products even at higher rate just to patronize their own products while the fifth is a nonentity From this observation, we can easily draw conclusions that people like to buy from a cheaper shop unless they are guided by patriotism or they are devoid of common sense.

Steps of Inductive Method

i. Observation

ii. Formation of hypothesis

iii. Generalization

iv. Verification

Merits of Inductive Method

i. It is based on facts as such the method is realistic.

ii. In order to test the economic principles, method makes statistical techniques.

iii. Induction method also helps in future investigation.

Demerits of Inductive Method

i. If conclusions drawn from insufficient data, the generalizations obtained may be faulty.

ii. The inductive method is time-consuming and expensive.

2. Deductive MethodThe deductive method is also named as analytical, abstract or prior method. The deductive method consists in deriving conclusions from general truths, takes few general principles and applies them draw conclusions.

Steps of Deductive Method

*Perception of the problem to be inquired into

*Defining of terms

*Deducing hypothesis from the assumptions

*Testing of hypothesis

Merits of Deductive Method

i. This method is near to reality. It is less time consuming and less expensive

ii. The use of mathematical techniques in deducing theories of economics brings exactness and clarity in economic analysis

iii. The method is simple because it is analytical

Demerits of Deductive Method

i. The deductive method is simple and precise only if the underlying assumptions are valid

ii. The deductive method is highly abstract. It require; a great deal of care to avoid bad logic or faulty economic reasoning

Name: Chukwu Augustina Chicheta

Martic no: 2020/243289

Department: Public Administration And Local Government

Email: chukwuaugustinac98@gmail.com

The basic method of analysis used by economist are; Deductive method and Inductive method.

1.Deductive method is a process of reasoning from one or more statement to reach conclusions.

In deductive method also known as abstract, analytical represent abstract approach to the derivation of economic generalization and theories.

The steps in the process of deriving economic generalization through deductive method are:

i. perception of the problem.

ii. definition of technical terms and making if assumption.

iii. deducing hypothesis through logical deduction.

iv. verification of hypothesis.

2. Inductive method of analysis is a method of reasoning in which statements are viewed as supplying some evidence, but not full assurance of the truth of the conclusion.

In this method of reasoning, one’s experiences and observations, including what is learned from others, are synthesized to come up with a general truth.

The followings are the steps in developing economic theories through inductive method:

i. Identifying the problem.

ii. defining technical terms and variables related to the problem.

iii. Collection of data.

iv. construction of economic theories.

Method of economics analysis:

An economic analysis involves the formulation of laws and generations through two method deductiveand inductive method

1:Deductivemethod.: known as abstract or analytical method.the deductive method consist in deriving conclusion from general all truth only few principle applies them conclusion for instance: if we accept the general proposition that man is entirely motivated by self interest in applying the deductive method of economic analysis ,we proceed from general to particular.step involves in deductive method (a). testing of hypothesis (b) defining of terms etc.

2: inductive method: which is also called empirical method was adopted by the historical school of economist it involves the process of reasoning from particular facts to general principle .this method derives economics generalization on the basis. 1) experimentation 2) observation and statistical method in this method data is collected about a certain economic phenomenon these systematically arranged and the general conclusion are drawn from them step involved are observation:

*Observation

*Generaralization and formation of hypothesis

*Generalizations

NAME: ONUIGBO ADAEZE JENNIFER

MATRIC NUMBER: 2020/242608

METHODS OF ECONOMIC ANALYSIS

Any economic analysis involves the formulation of laws and generalizations through two methods;

1. Deductive Method

2. Inducive Method

1. DEDUCTIVE METHOD: Here, economist observea and form certain assumptions ( elementary) or facts and then arrive at buildings hypothesis or theory using logical analysis or our own analytical abilities. They go from general to specific reasoning. It is a simple method and doesn’t require complex software analysis etc. The stages in deductive reasoning are;

1. Observation

2. Hypothesis

3. Testing hypothesis

If the hypothesis gets verified it becomes economic principles/laws and if it fails, the economist returns and look for another or an alternate hypothesis for the observation.

PATTERN FOR DEDUCTIVE METHOD;

OBSERVATION ( INFORMATION AND PATTERN)

⬇️

TENTATIVE HYPOTHESIS

⬇️

THEORY

2. INDUCIVE METHOD: This type of reasoning flows from facts to theory. First, we collect information and facts and then more towards providing evidence using economic theory and facts. This method formulates principle using sub-methods; observations, experimentations, statistical methods. Data is collected about a particular economic theory and then conclusions are drawn. The stages here include;

1. Observation

2. Formulation of hypothesis

3. Generalization of principles

4. Verifying against actual facts.

PATTERN FOR INDUCIVE METHOD:

THEORY

⬇️

HYPOTHESIS

⬇️

OBSERVATION

⬇️

CONFIRMATION

Okelekwe Chiamaka Mediatrix

Department of Economics

2020/242609

Qs: Briefly discuss on the basic method of economic analysis

Answer:

There mainly two basic method of economic analysis

1. Deductive analysis

2. Inductive analysis

1. Deductive analysis: also called prori reasoning. It starts from unchallenged elementary or rudimentary assumptions or facts and then arrive at conclusions using logical analysis. It usually goes from general to specific. The stages involved are:

a. Observation of a task

b. Making hypothesis

c. Testing the hypothesis using more observations

There are advantages and disadvantages using this method

Advantages: it is a simple method that doesn’t involve the use of a complex software analysis. It is also good for economists as it only involves the use of economic reasoning.

Disadvantages: This method of reasoning starts from mere assumptions which can be logically flawed which then makes it unreliable for use.

2. Inductive method: this type of reasoning flows from facts to thoery. First of all, there is collection of information and facts and then moving towards providing evidence using economic theory and facts. The stages are:

a. Observation

b. Formulation

c. Generalizing principle

d. Verifying against actual fact.

There are also advantages and disaOkelekwe Chiamaka Mediatrixdvantages of using this method

Advantages: since it based in facts is more reliable and realistic. More so, seeing that it uses statistical method of experiment, the process is scientific.

Disadvantages: if the data collected is insufficient and faulty then the conclusion cannot be trusted. It is also expensive and time consuming.

Chukwu Emmanuel Ugonna

22246088CF

Chukwuemma2212@gmail.com

PALG

QUESTION

What are the basic methods of analysis used by economists? Briefly and convincingly discuss each of them.

ANSWER

Deductive Method;

This is also called “priori reasoning”. A deductive approach to research and observation is the one that people typically liaise with scientific investigation. The researcher studies and take note of what others have done, reads existing theories/archives of whatever phenomenon he or she is studying and then tests the hypothesis that come forth from those theories, in brief this method aims at testing existing theories.

Inductive Method;

This method objective or prime goal is to generate theories based on specific instances of experimental observations. It refers to approaches that primarily use detailed list of data to bring out concepts. In brief inductive method aims at developing a theory.

NAME: OKORAFOR CHINONYEREM MGBO

MATRIC NUMBER:2020/242636

DEPARTMENT: ECONOMICS

COURSE CODE: ECO 101

COURSE TITLE: PRINCIPLES OF ECONOMICS

Deductive method a way of reasoning whereby a new true statement is formulated from several true statements (assumptions) following the rules of logic. Deductive reasoning has a status of proof. In the wide sense, deductive method is a cognitive operation in which new knowledge is logically obtained from a system of available certified knowledge. Deductive method is the main method of investigation in economics.

Inductive method is method of reasoning based on empirical observations. It allows for conclusions about the whole to be drawn based on evidence to given by samples(certain economic phenomenon). Simply put, it allows one to reason from the parts to establish the whole.

Name:Nwosu Uchenna E.

Reg number:20011956BF

Dept.Business Education

Faculty:Vocational Technical education

Email:uchennamnwosu203@gmail.com

Methods of Economic Analysis

Like any other science, Economics adopts two important methods in its investigations and formulation of laws and principles. The two methods are:

Deductive Methods and

Inductive Methods

1.Deductive method:Here we start with certain formal data and assumptions. Then by logical reasoning we arrive at certain conclusions. We start with undisputed fundamental facts and after adding some assumptions we build up a theory. For instance, it is assumed that businessmen aim at maximum profit. It follows from this that businessmen buy the materials in the cheapest market and sell it in the dearest market.

In Deductive method of Economic Analysis we proceed from the general to the particular. This is also known as an an hypothetical for some of the assumptions may not correspond to actual facts, but very near actual facts which may be used as premise for starting, reasoning and drawing conclusions. In economics we start with very simple premises and work up gradually or more and more complex hypotheses.

A complete form of deductive method consists of three stages and they are;

observation,

deductive reasoning and

instance and testing by means of further observations.

2.Inductive method:In this method, economists proceed from a practical angle to problems of science to reduce the gulf between theory and practice. Induction is done by two forms, viz. experimentation and statistical form. Facts are collected first, arranged and conclusions are drawn. Then these general conclusions are further verified with reference to actual facts.

The inductive method is generally associated with the statistical form of inductions. The statistical approach has a larger field in economic investigations than the method of experimentation. Further, the method of statistical induction is indispensable for the formulation of economic policy. Malthus presented his famous theory of population only after studying the facts of population in various countries; He then used statistics to support his theory. Similarly Engel, the German statistician employed inductive method and used statistics to formulate his law of consumption.

THE BASIC METHOD OF ECONOMIC ANALYSIS

The basic method of analysis used by economists are classified into the deductive reasoning and inductive reasoning.

1.) The deductive reasoning: it is also called analytical, abstract or prior method. the deductive method consists in deriving conclusions from general truths, takes few general principles and applies them then draw conclusion.

Steps of Deductive Method:

The main steps involved in deductive logic are as under:

The merits are:(ii) The use of mathematical techniques in deducing theories of economics brings exactness and clarity in economic analysis.

(iv) Testing of hypothesis: Before establishing laws or generalizations, hypothesis should be verified through direct observations of events in the rear world and through statistical methods. (Their inverse relationship between price and quantity demanded of a good is a well established generalization).

(i) This method is near to reality. It is less time consuming and less expensive.

(iii) There being limited scope of experimentation, the method helps in deriving economic theories.

(iv) The method is simple because it is analytical.

The demerits are:

(i) The deductive method is highly abstract. It require; a great deal of care to avoid bad logic or faulty economic reasoning.

(i) The deductive method is simple and precise only if underlying assumptions are valid.

2.) The inductive reasoning: it is also called empirical method and was adopted by the historical school of economists. it involves the process of reasoning from particular facts to general principles.

This method derives economic generalization on the basics of (i) Experiment (ii) Observation (iii)Statistical methods.

Steps of Inductive Method: the main steps are

(i) Observation.

(ii) Formation of hypothesis.

(iii) Generalization.

(iv) Verification.

Merits of Inductive Method:

(i) It is based on facts as such the method is realistic.

(ii) It is dynamic and also helps in future investigation

Demerits of Inductive Method:(ii) The collection of data itself is not an easy task. The sources and methods employed in the collection of data differ from investigator to investigator. The results, therefore, may differ even with the same problem.

The main weaknesses of this method are as under:

(i) If conclusions drawn from insufficient data, the generalizations obtained may be faulty.

(iii) The inductive method is time-consuming and expensive.

THE BASIC METHOD OF ECONOMIC ANALYSIS

The basic method of analysis used by economists are classified into the deductive reasoning and inductive reasoning.

1.) The deductive reasoning: it is also called analytical, abstract or prior method. the deductive method consists in deriving conclusions from general truths, takes few general principles and applies them then draw conclusion.

Steps of Deductive Method:

The main steps involved in deductive logic are as under:

The merits are:(ii) The use of mathematical techniques in deducing theories of economics brings exactness and clarity in economic analysis.

(iv) Testing of hypothesis: Before establishing laws or generalizations, hypothesis should be verified through direct observations of events in the rear world and through statistical methods. (Their inverse relationship between price and quantity demanded of a good is a well established generalization).

(i) This method is near to reality. It is less time consuming and less expensive.

(iii) There being limited scope of experimentation, the method helps in deriving economic theories.

(iv) The method is simple because it is analytical.

The demerits are:

(i) The deductive method is highly abstract. It require; a great deal of care to avoid bad logic or faulty economic reasoning.

(i) The deductive method is simple and precise only if underlying assumptions are valid.

2.) The inductive reasoning: it is also called empirical method and was adopted by the historical school of economists. it involves the process of reasoning from particular facts to general principles.

This method derives economic generalization on the basics of (i) Experiment (ii) Observation (iii)Statistical methods.

Steps of Inductive Method: the main steps are

(i) Observation.

(ii) Formation of hypothesis.

(iii) Generalization.

(iv) Verification.

Merits of Inductive Method:

(i) It is based on facts as such the method is realistic.

(ii) It is dynamic and also helps in future investigation

Demerits of Inductive Method:(ii) The collection of data itself is not an easy task. The sources and methods employed in the collection of data differ from investigator to investigator. The results, therefore, may differ even with the same problem.

The main weaknesses of this method are as under:

(i) If conclusions drawn from insufficient data, the generalizations obtained may be faulty.

(iii) The inductive method is time-consuming and expensive.

Name: Nweze Kingsley Ifeanyi

Jamb reg: 20679046BF

Faculty: Vocational and Technical Education

Department: Business Education

Email: nwezeikechukwujohnmartin@gmail.com

There are two types of Economist Analysis

1. Deductive method

2. Inductive method

Deductive method is also known analytical abstract a priori method.Deductive method make use of a certain data and assumption and by logical reasoning it will arrive at certain conclusions.For instance,it is assumed that businessmen aim at maximum profit.it says that businessmen buy the materials in the cheapest market and sell it in the dearest market where they will make profit.In Deductive method of Economist Analysis we proceed from the general to the particular.This is also known as an hypothetical method for some of some of the assumptions may not correspond to actual facts,but very near actual facts which may be used as premise for starting, reasoning and drawing conclusions.

A complete form of deductive method consists of these stages;

i.Observation

ii.deductive reasoning

iii.Instance and testing by means of further observation.

Inductive method.

In this method,economists proceed from a practical angle to problems of science to reduce the gulf between theory and practice. Inductive is done by two form; Experimentation and Statistical form.Here facts are collected first,arranged and conclusions are drawn.

The Inductive method is generally associated with the statistical form of induction. The statistical approach has larger field in economic investigations than the experimentation method.

In conclusion,the two methods, Inductive and Deductive are very important in economics analysis.Both of them are complementary to each other.

Name: Ezeka ChiNaza Bella

Department:Eco 101

Reg. Number: 20167946BF

Faculty: VTE

1.Deductive method :in deductive method of economic analysis we proceed from the general to the particular. Tips is also known as an hypothetical method for some of the assumptions may not correspond to actual facts which may be used as premise for starting, reasoning and drawing conclusions.

The methods are as follows:

A.perception of the problem to inquire into.

B.define precisely the technical term.

C.assumptions

D.hypothesis.

2. Inductive Method:

But, it is worth mentioning that the number of observations has to be large if it can yield a valid economic generalisation. One should not generalise on the basis of a very few observations. There are three ways which can be used for deriving economic principles and theories.

They are:

(a) Experimentation,

(b) observations,

(c) statistical or econometric method.

As has been mentioned above, the experimentation, that is, the use of contrived experiments is of limited applicability in economics. First, unlike natural sciences which are concerned with analysing the behaviour of either inanimate objects or obedient animals such as rats and rabbits under the influence of chloroform, economics deals with the behaviour of man who is quite fickle, wayward and unmanageable.

Besides, man cannot tolerate the idea of being experimented upon, either individually or collectively. Secondly, an economic phenomenon is the result of multiplicity of factors and causes acting and interacting upon each other.

Therefore, economic phenomenon does not repeat itself in the same uniform pattern. Numerous factors acting on an economic phenomenon ‘disturb’ it and make its exact repetition unlikely. Thus, as compared with the natural phenomena, economic phenomena are of less uniform pattern, less repetitive and more variable.

Thirdly, economists study the economic phenomena in which pressure groups such as employers’ associations, trade unions, farming lobby, political parties with their different ideologies play a crucial part and their activities render it difficult to make controlled experiments in the economic world. However, in spite of these difficulties, experimental method can be used in some fields.

For instance, experiments have been conducted to find out which law of production is valid, that is, whether law of diminishing returns, law of constant returns or law of increasing returns operates in the real world. Besides, public undertakings or big industrial firms often try to assess the effect of the changes in the prices of their products on the demand for it and thus find out the demand elasticity of their products.

Okechukwu prosper

Matric no:2020/242139

Basic methods of economics analysis are:

1.Inductive method

2.Deductive method

1.Inductive method which is also known as empirical method.it involves logical thinking that combines observations with experiented information to reach a conclusion.It is aimed at developing a theory.

2.Deductive method which is also called abstract, analytical,or priori method represent an abstract approach to the derivative of economic generalization and theories.It is aims at testing an existing theory.it can also be called hypothetical method for some of the actions may not correspond to actual fact, but very near actual facts which may be used as premises for starting, reasoning and drawing conclusions.

METHOD OF ECONOMICS ANALYSIS

Economics analysis involves formulation of laws and generalizations

(1)Deductive Method

This is also called priori reasoning. It’s start from unchallenged elementary or rudimentary assumption /facts and when arrive at conclusions (build a hypothesis or theory) using logical analysis or own analytical abilities.in these kind of reasoning we go from general to specific.

-observation of a task/issue

-making the hypothesis

-testing the hypothesis using more observation.

Advantage of deductive method

(1)It doesn’t involve the use of any complex software analysis.

(2)This method is important for economists as it focuses upon economics reasoning which is of paramount importance.

Disadvantages of deductive method

(1) it starts from assumptions,thus if the assumption happen to be logically flawed the whole process become faulty and would give wrong conclusions.

INDUCTIVE METHOD

This type of reasoning flows from facts of theory. First we collect information and facts then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-method -observation, Experimentation, Statistical method

Stages in Inductive method

(1)Observation

(2)Formulation of hypothesis

(3)Generalizing principles

(4)Verifying against actual facts

Advantages of Inductive method

-since it is based on facts it is more realistic and reliable.

-Using statistical method and experimentations makes the process more scientific thus, more acceptable universally rather than just depending on your own reasoning and logic.

-Since the economic environment is dynamic and always changing, relying upon a more scientific method always help reach logical conclusion.

Disadvantages of inductive method

(1)if data used is insufficient and faulty, it will lead to faulty conclusions, making the hypothesis less reliable.

(2) it is a time -consuming process and thus expensive as well.

(3) the collection of the data is not an easy job and varies from person to person, as how they collect data.

Two types of economic analysis

Deductive

Inductive

Deduction Means reasoning or inference from the general to the particular or from the universal to the individual. The deductive method derives new conclusions from fundamental assumptions or from truth established by other methods. It involves the process of reasoning from certain laws or principles, which are assumed to be true, to the analysis of facts.

Deduction involves four steps: (1) Selecting the problem. (2) The formulation of assumptions on the basis of which the problem is to be explored. (3) The formulation of hypothesis through the process of logical reasoning whereby inferences are drawn. (4) Verifying the hypothesis. These steps are discussed as under.

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(1) Selecting the problem:

The problem which an investigator selects for enquiry must be stated clearly. It may be very wide like poverty, unemployment, inflation, etc. or narrow relating to an industry. The narrower the problem the better it would be to conduct the enquiry.

(2) Formulating Assumptions:

The next step in deduction is the framing of assumptions which are the basis of hypothesis. To be fruitful for enquiry, the assumption must be general. In any economic enquiry, more than one set of assumptions should be made in terms of which a hypothesis may be formulated.

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(3) Formulating Hypothesis:

The next step is to formulate a hypothesis on the basis of logical reasoning whereby conclusions are drawn from the propositions. This is done in two ways: First, through logical deduction. If and because relationships (p) and (q) all exist, then this necessarily implies that relationship (r) exists as well. Mathematics is mostly used in these methods of logical deduction.

(4) Testing and Verifying the Hypothesis:

The final step in the deductive method is to test and verify the hypothesis. For this purpose, economists now use statistical and econometric methods. Verification consists in confirming whether the hypothesis is in agreement with facts. A hypothesis is true or not can be verified by observation and experiment. Since economics is concerned with human behaviour, there are problems in making observation and testing a hypothesis.

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For example, the hypothesis that firms always attempt to maximise profits, rests upon the observation that some firms do behave in this way. This premise is based on a priori knowledge which will continue to be accepted so long as conclusions deduced from it are consistent with the facts. So the hypothesis stands verified. If the hypothesis is not confirmed, it can be argued that the hypothesis was correct but the results are contradictory due to special circumstances.

Under these conditions, the hypothesis may turn out to the wrong. In economics, most hypotheses remain unverified because of the complexity of factors involved in human behaviour which, in turn, depend upon social, political and economic factors. Moreover, controlled experiments in a laboratory are not possible in economics. So the majority of hypotheses remain untested and unverified in economics.

Merits of Deductive Method:

The deductive method has many advantages.

(1) Real:

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It is the method of “intellectual experiment,” according to Boulding. Since the actual world is very complicated, “what we do is to postulate in our own minds economic systems which are simpler than reality but more easy to grasp. We then work out the relationship in these simplified systems and by introducing more and more complete assumptions, finally work up to the consideration of reality itself.” Thus, this method is nearer to reality.

(2) Simple:

The deductive method is simple because it is analytical. It involves abstraction and simplifies a complex problem by dividing it into component parts. Further, the hypothetical conditions are so chosen as to make the problem very simple, and then inferences are deduced from them.

(3) Powerful:

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(4) Exact:

The use of statistics, mathematics and econometrics in deduction brings exactness and clarity in economic analysis. The mathematically trained economist is able to deduce inferences in a short time and make analogies with other generalisations and theories. Further, the use of the mathematical-deductive method helps in revealing inconsistencies in economic analysis.

(5) Indispensable:

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The use of deductive method is indispensable in sciences like economics where experimentation is not possible. As pointed out by Gide and Rist, “In a science like political economy, where experiment is practically impossible, abstraction and analysis afford the only means of escape from those other influences which complicate the problem so much.”

(6) Universal:

The deductive method helps in drawing inferences which are of universal validity because they are based on general principles, such as the law of diminishing returns.

Demerits of Deductive Method:

Despite these merits, much criticism has been levelled against this method by the Historical School which flourished in Germany.

1 .Unrealistic Assumption:

Every hypothesis is based on a set of assumptions. When a hypothesis is tested, assumptions are indirectly tested by comparing their implications with facts. But when facts refute the theory based on the tested hypothesis, the assumptions are also indirectly refuted. So deduction depends upon the nature of assumptions. If they are unrealistic, in this method, economists use the ceteris paribus assumption. But other things seldom remain the same which tend to refute theories.

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2. Not Universally Applicable:

Often the conclusions derived from deductive reasoning are not applicable universally because the premises from which they are deduced may not hold good at all time and places. For instance, the classicists assumed in their reasoning that particular conditions prevailing in England of their times were valid universally. This supposition was wrong. Prof. Lerner, therefore, points out that the deductive method is simply “armchair analysis” which cannot be regarded as universal.

3. Incorrect Verification:

The verification of theories, generalisations or laws in economics is based on observation. And right observation depends upon data which must be correct and adequate. If a hypothesis is deduced from wrong or inadequate data, the theory will not correspond with facts and will be refuted. For instance, the generalisations of the classicists were based on inadequate data and their theories were refuted. As pointed out by ircholson, “the great danger of the deductive method lies in the natural aversion to the labour of verification.”

4. Abstract Method:

The deductive method is highly abstract and requires great skill in drawing inferences for various premises. Due to the complexity of certain economic problems, it becomes difficult to apply this method even at the hands of an expert researcher. More so, when he uses mathematics or econometrics.

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5. Static Method:

This method of analysis is based on the assumption that economic conditions remain constant. But economic conditions are continuously changing. Thus this is a static method which fails to make correct analysis.

6. Intellectually:

The chief defect of the deductive method “lies in the fact that those who follow this method may be absorbed in the framing of intellectual toys and the real world may be forgotten in the intellectual gymnastics and mathematical treatment.”

The Inductive Method:

Induction “is the process of reasoning from a part to the whole, from particulars to generals or from the individual to the universal.” Bacon described it as “an ascending process” in which facts are collected, arranged and then general conclusions are drawn.

The inductive method was employed in economics by the German Historical School which sought to develop economics wholly from historical research. The historical or inductive method expects the economist to be primarily an economic historian who should first collect material, draw gereralisations, and verify the conclusions by applying them to subsequent events. For this, it uses statistical methods. The Engel’s Law of Family Expenditure and the Malthusian Theory of Population have been derived from inductive reasoning.

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The inductive method involves the following steps:

1. The Problem:

In order to arrive at a generalisation concerning an economic phenomenon, the problem should be properly selected and clearly stated.

2. Data:

The second step is the collection, enumeration, classification and analysis of data by using appropriate statistical techniques.

3. Observation:

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Data are used to make observation about particular facts concerning the problem.

4. Generalisation:

On the basis of observation, generalisation is logically derived which establishes a general truth from particular facts.

Thus induction is the process in which we arrive at a generalisation on the basis of particular observed facts.

The best example of inductive reasoning in economics is the formulation of the generalisation of diminishing returns. When a Scottish farmer found that in the cultivation of his field an increase in the amount of labour and capital spent on it was bringing in less than proportionate returns year after year, an economist observed such instances in the case of a number of other farms, and then he arrived at the generalisation that is known as the Law of Diminishing Returns.

Merits of Inductive Method:

The chief merits of this method are as follows:

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(1) Realistic:

The inductive method is realistic because it is based on facts and explains them as they actually are. It is concrete and synthetic because it deals with the subject as a whole and does not divide it into component parts artificially

(2) Future Enquiries:

Induction helps in future enquiries. By discovering and providing general principles, induction helps future investigations. Once a generalisation is established, it becomes the starting point of future enquiries.

(3) Statistical Method:

The inductive method makes use of the statistical method. This has made significant improvements in the application of induction for analysing economic problems of wide range. In particular, the collection of data by governmental and private agencies or macro variables, like national income, general prices, consumption, saving, total employment, etc., has increased the value of this method and helped governments to formulate economic policies pertaining to the removal of poverty, inequalities, underdevelopment, etc.

(4) Dynamic:

The inductive method is dynamic. In this, changing economic phenomena can be analysed on the basis of experiences, conclusions can be drawn, and appropriate remedial measures can be taken. Thus, induction suggests new problems to pure theory for their solution from time to time.

(5) Histrico-Relative:

A generalisation drawn under the inductive method is often histrico-relative in economics. Since it is drawn from a particular historical situation, it cannot be applied to all situations unless they are exactly similar. For instance, India and America differ in their factor endowments. Therefore, it would be wrong to apply the industrial policy which was followed in America in the late nineteenth century to present day India. Thus, the inductive method has the merit of applying generalisations only to related situations or phenomena.

Demerits of Inductive Method:

However, the inductive method is not without its weaknesses which are discussed below.

(1) Misenterpretation of Data:

Induction relies on statistical numbers for analysis that “can be misused and misinterpreted when the assumptions which are required for their use are forgotten.”

(2) Uncertain Conclusions:

Boulding points out that “statistical information can only give us propositions whose truth is more or less probable it can never give us certainty.”

(3) Lacks Concreteness:

Definitions, sources and methods used in statistical analysis differ from investigator to investigator even for the same problem, as for instance in the case of national income accounts. Thus, statistical techniques lack concreteness.

(4) Costly Method:

The inductive method is not only time-consuming but also costly. It involves detailed and painstaking processes of collection, classification, analyses and interpretation of data on the part of trained and expert investigators and analysts

(5) Difficult to Prove Hypothesis:

Again the use of statistics in induction cannot prove a hypothesis. It can only show that the hypothesis is not inconsistent with the known facts. In reality, collection of data is not illuminating unless it is related to a hypothesis.

(6) Controlled Experimentation not Possible in Economics:

Besides the statistical method, the other method used in induction is of controlled experimentation. This method is extremely useful in natural and physical sciences which deal with matter. But unlike the natural sciences, there is little scope for experimentation in economics because economics deals with human behaviour which differs from person to person and from place to place.

Further, economic phenomena are very complex as they relate to man who does not act rationally. Some of his actions are also bound by the legal and social institutions of the society in which he lives. Thus, the scope for controlled experiments in inductive economics is very little. As pointed Out by Friendman, “The absence of controlled experiments in economics renders the weeding out of unsuccessful hypo-these slow and difficult.”

Conclusion:

The above analysis reveals that independently neither deduction nor induction is helpful in scientific enquiry. In reality, both deduction and induction are related to each other because of some facts. They are the two forms of logic that are complementary and co-relative and help establish the truth.

Marshall also supported the complementary nature of the two methods when he quoted Schmoller: “Induction and deduction are both needed for scientific thought as the right and left foot are needed for walking.” And then Marshall stressed the need and use of integrating these methods.

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The methods use in economics analysis are

Deductive and Inductive method

1)Deductive /abstract method : we start with certain formal data and assumption , but by logical reason we arrive at certain conclusion,we start with undisputed fundermental fact and after adding some assumption,we build up a theory and in this method assumptions may not correspond to actual fact, when this happens it is HYPOTHETICAL method .

2)Inductive /empirical method :in this method detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalization which follow from the observation collected ,one should not generalize on the basis of a very few but in large way .

In this method we make use of econometric package to run the experiment

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METTODS OF ECONOMICS ANALYSIS

Generalisation in economic analysis have been derived in two ways.

1. Deductive Mettod: The deductive Mettod of generalisation is also called the abstract, analytical and a priori Mettod and represent an abstract approach to the derivation of economic generalisation and theories, this is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions facts and then arrive at conclusion building a hypothesis and theory using our logical analysis or our own analytical abilities.there are stages in deductive reasoning which are;

1. Observation of a task issue

2. Making the hypothesis

3. Testing the hypothesis using more observation.

ADVANTAGES OF DEDUCTIVE METTOD

1. It doesn’t involve the use of any complex software analysis

2. This Mettod is important for economist as it focuses upon economic reasoning which is Paramount importance.

DISADVANTAGE

1. Logical Fallacy.

INDUCTIVE METTOD: This is also called Emperical Mettod derives economic generalisation on the basis of experience and observation in this Mettod detailed data are called with regard to a certain economic phenomenon and effort is then made arrive at certain fact. this type of reasoning flows from facts to theory,we collect information and facts and then move towards providing evidence using economic theory and facts. This Mettod fumulate principles using the sub-mettods which are:

1. Observation

2.Experimentation

3. Statistical Mettod.

ADVANTAGES

1. It is based on facts

2. It is dynamic and always change.

DISADVANTAGES

1. It makes data insufficient.

2. It has faulty conclusion

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Economic Analysis involves the formulation of law and its generalization through two major methods, DEDUCTIVE and INDUCTIVE method.

1.DEDUCTIVE METHOD: In this method, hypothesis or theory is built using logical abilities or analytical abilities and when verified we get general economic reasoning or law. In this reasoning, we go from general to specific. This is also called ‘A Priori Reasoning’

The stages in this method involve;

a) Information/assumption/perception.

b) Observation of a task or issue/Perception

c) Making the hypothesis

d) Testing the hypothesis using more observation

Advantages of Deductive method;

1)The deductive method only requires simple deductive logic, doesn’t involve the use of any complex software analysis and so on. The reasoning starts from assumptions, therefore if the assumptions are logically flawed/wrong the whole process becomes faulty.

2)This method is also important for economists as it focuses upon economical reading which is of great importance.

2.INDUCTIVE METHOD: In this method, information and facts are collected then move towards providing evidence using economic theory and facts.

The stages in this method involve;

a) Observation

b) Formulation of hypothesis

c) Generalizing principles

d) Verifying against actual facts.

This method formulates principles using; Observation, Experimentation and statistical methods.

Advantages of Inductive Method;

1)This method is more realistic and reliable because it is based on facts.

2)This method is more acceptable universally because it uses statistical methods and experimentations rather than depending on mere reasoning and logic, which makes it more scientific.

3)It is easier to rely on its scientific method because of the dynamic nature of the economical environment.

There are two economic analysis

1.Deductive analysis

2. Inductive analysis

Deductive Method of Economic Analysis

Deductive method is known as the analytical abstract a priori method. Here we start with certain formal data and assumptions. Then by logical reasoning we arrive at certain conclusions. We start with undisputed fundamental facts and after adding some assumptions we build up a theory. For instance, it is assumed that businessmen aim at maximum profit. It follows from this that businessmen buy the materials in the cheapest market and sell it in the dearest market.

In Deductive method of Economic Analysis we proceed from the general to the particular. This is also known as an hypothetical method for some of the assumptions may not correspond to actual facts, but very near actual facts which may be used as premise for starting, reasoning and drawing conclusions. In economics we start with very simple premises and work up gradually or more and more complex hypotheses.

A complete form of deductive method consists of three stages, viz.,

observation;

deductive reasoning and

instance and testing by means of further observations.

Deductive reasoning provides us with hypotheses or generalizations. If the hypotheses are tested and verified with relevance to facts, we have valid economic laws.

Advantages of Deductive Method of Economic Analysis

Deductive method has the following ‘merits’

1. Deductive method is exceedingly simple. For example, the law that the utility derived by an individual from a commodity goes on diminishing with every successive addition is a self-evident truth from which we may draw many logical conclusions, viz., larger the stock of money, the lower shall be the utility of money; rich persons have lesser marginal utility of money than the poor people; so taxes should not be levied on proportional basis. If taxes are levied proportionately, the sacrifice of the poor will be larger than the rich. This is against the Canon of equity, etc. Thus the principle of progressive taxation is derived from the law of diminishing utility through deductive reasoning.

2. Deductive method obviates the necessity of experimentation. Economics being a social science, experimentation may not be available as in the case of physics or chemistry. So, the next best alternative to experiment is deductive reasoning. According to Boulding this method of deductive reasoning is the method of intellectual experiment.

3. The deductive method results in accuracy and exactness in generalization, because of logical reasoning. The method gives a very high standard of precision in abstract economic reasoning.

Disadvantages of Deductive Method of Economic Analysis

Deductive method has its drawbacks also:

1. Deduction is based mainly on assumptions which are perfectly valid. If assumptions are wrong, generalizations made on the basis of wrong assumptions will be imperfect and invalid. All economic laws are based on too many assumptions where there are more scope for committing errors through wrong hypotheses.

2. In deduction there is too much of abstraction and economists by means of their intellectual exercises produce only “intellectual toys” having little connection with reality.

3. Deductive generalizations started on wrong premises will be dangerous when such generalization claim universal validity. Then such faulty generalizations are made use of in framing government policies, the results would be nothing but disastrous. For example, J.B.Say, claimed universal validity for his ‘Law of Markets’ in which he maintained that supply creates its own demand and there will not be over-production in the market. But this celebrated ‘Law of Market’ was torn to pieces when critics proved that Say’s Law was wrong and overproduction would be possible.

Inductive Method of Economic Analysis

In this method, economists proceed from a practical angle to problems of science to reduce the gulf between theory and practice. Induction is done by two forms, viz. experimentation and statistical form. Facts are collected first, arranged and conclusions are drawn. Then these general conclusions are further verified with reference to actual facts.

The inductive method is generally associated with the statistical form of inductions. The statistical approach has a larger field in economic investigations than the method of experimentation. Further, the method of statistical induction is indispensable for the formulation of economic policy. Malthus presented his famous theory of population only after studying the facts of population in various countries; He then used statistics to support his theory. Similarly Engel, the German statistician employed inductive method and used statistics to formulate his law of consumption.

Advantages of Inductive Method of Economic Analysis

Inductive method has the following merits:

1. It is highly practical add realistic as it describes things as they are.

2. It is helpful in verifying the conclusions of the deductive method.

3. Economic laws under this method are not universal but valid only under certain conditions.

Disadvantages of Inductive Method of Economic Analysis

Inductive method has the following limitations:

1. When the investigators lack a balanced judgement there is the risk of drawing hurried conclusions based on inadequate and irrelevant facts and data.

2. Collection of facts in the inductive process is a highly complex and complicated job warranting extraordinary understanding to alienate economic from non-economic factors.

3. Mere induction alone will not deliver goods unless it is supplemented by means of deductive reasoning. Without deduction, the inductive method would result in producing only a mass of unrelated and unconnected facts.

Name: Ume Ozioma Victory

Email: oziomavictory24@gmail.com

Matric number: 20679167HF

Department: Nursing Sciences

Course code: Eco101

Course title: Principles of Economics

ECONOMIC ANALYSIS

Some of the important methods of Economic Analysis include

1) DEDUCTIVE METHOD

This is also called ABSTRACT, ANALYTICAL and PRIORI method and represents an abstract approach to derivation of economic generalizations and theories. Steps in the process of deriving economic generalizations through deductive logic are

A) PERCEPTION OF THE PROBLEM REQUIRED TO BE ENQUIRED INTO

In a scientific enquiry,the theorist or analyst must have a clear idea of the problem to be enquired into. He or she must know the significant variables regarding whose behaviour and interrelationship he or she wants to derive generalizations. This is by no means an easy task.

B) DEFINITION OF TECHNICAL TERMS AND MAKING OF ASSUMPTIONS.

This means to define precisely and unambiguously the various technical terms to be used in the analysis as well as to state clearly the assumptions he makes to derive generalizations. Assumptions as mentioned above, may be behavioral pertaining to the behaviour of the economic variables or they may be technological relating to the state of technology and factor endowments. The crucial assumptions are made on the basis of observations. Each and every assumption made by a theory may not be realistic. A correct scientific theory or generalization must be expressed in the form of a hypothesis that is conceivably refutable.

C) DEDUCING HYPOTHESIS THROUGH LOGICAL DEDUCTION.

A hypothesis describes relationship between factors affecting a phenomenon; it establishes the cause and effect relationship between the variables having a bearing on the phenomenon. Then through logical process, hypothesis is deduced from the assumptions made. This logical reasoning may be carried out verbally or it may be conducted in symbolic terms using the language of what is known as SYMBOLIC LOGIC. The GEOMETRIC or GRAPHIC TECHNIQUE is also usually employed to deduce the hypothesis about the relationship between factors. Besides, the process of logical deduction may be done with the help of more formal mathematics.

D) TESTING OR VERIFICATION OF HYPOTHESIS

For the verification of hypothesis, economists cannot make controlled experiments, because they have to discover uniformities in behaviour patterns of man. We cannot make experiments with man under controlled conditions, such as in laboratories as physical scientists make experiments with inanimate objects of mature and biologists make there with animals and plants. So they have to rely on uncontrolled experience and observations. In the absence of controlled experiments, for the verification of their theories,economists have to rely on the direct observations of events in the real world. By direct observations, we mean “gathering of information personally or reliance on comparatively unprocessed materials such as files of business firms; to mention but a few.

MERITS OF DEDUCTIVE METHOD

1) Compared to the inductive method, deductive method is less time consuming and less expensive

2) Useful economic theories can be derived logic without the teinuous and detailed collection and analysis of data which are required under the inductive method

DEMERITS OF DEDUCTIVE METHOD

1) The use of deductive method in deriving economic generalizations require the use of high-level competence in logic and theoritical abstractions.

INDUCTIVE METHOD

This is also called EMPIRICAL METHOD. It derives economic generalizations on the basis of experience and observations. Detailed data are collected. There are 3 ways which can be used for deriving economic principles and theories. They are;

A) Experimentations

B) Observations

C) Statistical or economic method

STEPS IN INDUCTIVE METHOD

1) Identify the problem

2) Determining technical terms and variables related to the problem

3) Collection of data about the variables related to the problem and during some preliminary thinking about the possible functional relationships between the relevant variables

4) Processing of data collected and finding out what relationship between the variables actually hold goods.

The use of inductive method is not of much value if it is not supported by the economic hypothesis or theory developed by deductivw logic. It can at best be used to empirically test the theory or hypothesis as to whether it is consistent with or refuted by factor. But there is a general risk of conclusions being drawn from insufficient data.

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FACULTY: SOCIAL SCIENCE

DEPARTMENT: EDUCATION ECONOMICS

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METHOD OF ANNALYSIS

1. DEDUCTIVE METHOD:The deductive method is also called abstract analytical and and a prior method and represent an abstract approach. Precisely the technical terms and making of assumptions, deducing hypothesis and testing the hypothesis, is aslo a process followed in deductive process.Then by logical reason they arrive at a certain conclusions.

2. INDUCTIVE METHOD :It involves observation and measures of deriving economic generalization. In inductive methods facts are collected, arranged and conclusions drawn

NAME: NNAMANI RONALD CHINEDU.

JAMB REG NUMBER:20643783BA.

DEPARTMENT: PHILOSOPHY.

FACULTY: SOCIAL SCIENCE.

EMAIL: nnamanironaldchinedu@gmail.com

Method of economic analysis.

1. Deductive method: This method of deriving economic analysis and generalization can also be called abstract, analytical and priori method. This method involves the use of reasoning,logic and hypothesis. Some of its procedures are:

a. Perception of the problem: This means the economist must have an idea on the problem.

b. Defining precisely the technical term.

c. The use of assumption and derivation of hypothesis.

d. Testing of hypothesis.

Advantage of deductive method: It is easy,cheap and simple.

Disadvantage of deductive method: It can be inaccurate because sometimes the assumptions being made can be wrong.

2. Inductive method: This method of deriving economic analysis is also called Empirical method. In this method the economist observes, gathers and uses data inorder to get it’s economic analysis. Also the use of econometric packages are used for experimentation. Some of the procedures of this method are:

a. Observation and experimentation.

b. Formulation of hypothesis.

c. Generalizing principles.

d. Verifying against actual fact and statistical method.

Advantage of inductive method: It is highly reliable and accurate because data is being gathered and used.

Disadvantage of inductive method: It waste and consumes time. It is also stressful and difficult.

Department: Economics

Reg: 2020/242639

The methods of Economic Analysis

1. Inductive method

This method details the collection of data with regards to a certain economic phenomenon and effort is then made to arrive at certain generalizations which follow the observation collected. It is neccessary to note that one should not generalize only on a very few observations but large number of observations which can yield a valid generalization.

2. Deductive method

This method consist of deriving conclusion from general truth, takes few general principle and applies them, draw conclusion. For instance, if we accept the general proposition that man is entirely motivated by self-interest. In applying the deductive method of economic analysis, we proceed from general to particular.

Department: Economics

Reg: 2020/242639

The methods of Economic Analysis

1. Inductive method

This method details the collection of data with regards to a certain economic phenomenon and effort is then made to arrive at certain generalizations which follow the observation collected. It is neccessary to note that one should not generalize only on a very few observations but large number of observations which can yield a valid generalization.

2. Deductive method

This method consist of deriving conclusion from general truth, takes few general principle and applies them, draw conclusion. For instance, if we accept the general proposition that man is entirely motivated by self-interest. In applying the deductive method of economic analysis, we proceed from general to particular.

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Reg number: 20643457CF

E mail:lilianagbo31@gmail.com

Basic Methods of Analysis Used by Economists

Economics analysis is defined as the various methodes that Economists use in experiments of models (data)

These are the process and procedures that helps economist during experiment of analysis, observation, construction and investigation of problems to derive an answer.

___ Inductive method

___Deductive method

INDUCTIVE METHOD

In Inductive method of analysis, an economist makes use of econometric packages to analyze his data.The econometric packages are

__E – View and

__Stata

These are the packages used for analysis by using data to test the economy and goes ahead to produce solution (Advice).

In these procedures data are generated through the people’s

Interest

Taste

Preference

Opinions

Ideas

An economist takes observation through them to analyze and balance his results which he goes ahead to generate economic advice

DEDUCTIVE METHOD

In deductive method of analysis, generalization and theory are used in economics based of experiment.

These includes

__perception : this is to perceive the problem and identify the issue to turn generalization to theory.we do this by technical terms of explanation of observation and assumptions of problems for prove .

__Postulate: this is to assume a result which falls on analysis.

__Hypothesis: this is when an economist goes ahead to compare his analysis with his observation and people’s individual preferences. This actualizes

Alternative hypothesis__this is the end of resul

Null hypothesis __this is the assuming part.

me: Eze Judith chinonso

Reg no: 2020/242913

Email: ezejudith863@gmail.com

Department: Combined social sciences (Economics/political science)

Faculty: social sciences

Methods of Economic Analysis:

Some of the most important methods of economic analysis are as follows:

1. Deductive Method

2. Inductive Method.

Economic generalisations describe the laws or statements of tendencies in various branches of economics such as production, consumption, exchange and distribution of in -come. In the view of Robbins, economic generalisations or laws are statements of uniformities which describe human behaviour in the allocation of scarce resources between alternative ends.

The generalisations of economics like the laws of other sciences, state cause and effect relation ships between variables and describe those economic hypotheses which have been found consistent with facts or, in other words, have been found to be true by empirical evidence. But a distinction may be drawn between a generalisation (law) and a theory.

A law or generalisation just describes the relationship between variables; it does not provide any explanation of the described relation. On the other hand, a theory provides an explanation of the stated relation between the variables, that is, it brings out the logical basis of the generalisation. An economic theory or a model derives a generalisation through process of logical reasoning and explains the conditions under which the stated generalisation will hold true.

Reg number:20022678IA Department:Economics Blog address:Uzoetohclara.blogspot.com

The basic methods of economic analysis are:

a) Inductive method

b) Deductive method

a) Inductive method:It derives economic generalizations on the basis of experience and observations. In this method, detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalizations which follow from the observations collected. It is also known as Empirical method.

Stages of deriving economic generalizations through inductive method are:

1) Experimentation

2) Observation

3) Statistical or econometric method

Advantages of inductive method

a) Since it is based on facts, it is more realistic and reliable.

b) Using statistical methods and experimentations make the process more scientific, thus more acceptable universally rather than just depending on your own reasoning and logic.

c) Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

Disadvantages of inductive method

a) If the data used is insufficient and faulty, it would lead to faulty conclusions making the results less reliable.

b) It is time-consuming and expensive.

c) Collection of all the data is quite stressful and varies from person to person.

d) Deductive method:In this method we go from general reasoning to specific analysis. It is also called abstract, analytical and a priori method and represents an abstract approach to the derivation of economic generalizations and theories.

Stages of deriving economic generalizations through deductive method

1) Perception of the problem to be inquired about;He must know the significant variable regarding whose behavior and inter-relationship he wants to derive generalizations.

2) Definition of technical terms and making of assumptions;Simplifying assumptions is quite necessary in order to bring out the importance of really significant factors having a bearing on the problem under investigation. It enables us predict things accurately.

3) Deducing hypotheses through logical deduction;The hypotheses describes the relationship between factors affecting a phenomenon,it establishes the cause and effect relationship between the variables. Through logical process, hypothesis is deduced from the assumptions made.

4) Testing or verification of hypotheses;Two related distinctions must be borne in mind;first, functional relationship between economic variables and a historically sequence of events must be distinguished. Second, the actual course of events is governed by several other factors assumed by a generalization which remains constant under the qualification“other things remaining the same”.

Advantages of deductive method

a) It doesn’t involve the use of any complex software analysis, only simple deductive logic is required.

b)It focuses upon economic reasoning which is of paramount importance.

Disadvantage of deductive method

a) Logical fallacy; if the assumptions happen to be logically flawed, the whole process becomes faulty and would give wrong conclusions.

Conclusion:Both methods of economic analysis are complimentary rather than competitive.

Omeje Deborah Mmesoma

2020/242625

omejedeborahmmesoma@gmail.com

Deductive Method derives new conclusion from fundamental assumptions or from truth established by other methods. It involves the process of reasoning from certain laws or principles, which are assumed to be true, to the analysis of facts. In economics, Deductive method is simple to use because it is analytical, it involves abstraction and simplifies complex problems by deviding it into different parts. It is also a powerful method for deducing conclusions from facts.

Inductive Method derives economic generalization on the basis of experience and observations. In economics, Inductive method helps in the observation of facts through collection of detailed data and use of statistical methods to arrive at economic development. Some of the recent researches in the field of macro-economics such as the principle of acceleration describing the factors which determine investment in the economics have been obtained through the use of Inductive method.

I

NAME: ACHICHI JOSEPH OFIONYE

REG NO: 2019/241290

FACULTY: PHYSICAL SCIENCES

DEPARTMENT: PURE AND INDUSTRIAL CHEMISTRY

Economics like every other sciences, employs two essential methods in its investigations and formulation of law and principles. The two methods includes:

1.Deductive method

2. Inductive method

DEDUCTIVE METHOD

Deductive method is a method of economic analysis that involves the use of logical reasoning to arrive at a conclusion using formal data and assumptions. This method provides us with generalizations and hypotheses.We have valid economic laws if the hypotheses are tested and verified with relevance to facts.

A complete form of deductive method consist of three stages, viz

1. Observation

2. Deductive reasoning

3. Instance and testing by means of further observation.

INDUCTIVE METHOD

The inductive method is sometimes similar to the deductive method. The only thing that differentiates them is that induction uses econometric packages i.e E-views and STATA to run experiment. This method proceeds from a practical angle to problem of science to reduce the gulf between theory and practice. Induction is done by two form, viz, experimentation and statistical form. Here facts are first collected, arranged and conclusions are then drawn. Then these general conclusions are further verified with reference to actual facts.

The inductive method is generally associated with the statistical form of induction because statistical approach has a higher field in economic investigations than the method of experiment. The statistical induction is indispensable for the formulation of economic policy. Malthus and Engel used the statistical induction to present the Theory of Population and Law of Consumption respectively.

Name:Anusia goodness tochukwu

Department: Vocational and technical education

Course:Eco 101

Gmail: goodnessanusia@gmail.com

Deductive method: In deductive method of economics analysis we proceed from the general to the particular. This is also known as a hypothetical method for some of the assumption s may not correspond to actual facts, but very near actual facts which may be used as permise for starting, reasoning and drawing conclusions.

Methods include:

1.Perception of the problem to inquire into.

2. Define precisely the technical terms.

3.Assumptions.

4.Hypothesis.

Inductive method: which is also called empirical method was adopted by historical economists. It involves the process of reasoning from particular fact to general principal.

Methods include:

1. Experimentation.

2. Observation.

3. Statistical method.

Name:Anusia goodness tochukwu

Department: Vocational and technical education

Course:Eco 101

Gmail: goodnessanusia@gmail.com

Deductive method: In deductive method of economics analysis we proceed from the general to the particular. This is also known as a hypothetical method for some of the assumption s may not correspond to actual facts, but very near actual facts which may be used as permise for starting, reasoning and drawing conclusions.

Methods include:

1.Perception of the problem to inquire into.

2. Define precisely the technical terms.

3.Assumptions.

4.Hypothesis.

Inductive method: which is also called empirical method was adopted by historical economists. It involves the process of reasoning from particular fact to general principal.

Methods include:

1. Experimentation.

2. Observation.

3. Statistical method.

NAME_ KENECHUKWU EMMANUEL ONYEDIKA

FACULTY_ SOCIAL SCIENCE

DEPARTMENT_ ECONOMICS

REG NO_ 2020/242637

_Methods of Economic Analysis_

In economics, broadly we make use of two methods.

(i) Deductive method

(ii) Inductive method

The deductive method is also known as abstract method or analytical method. This method is based on a priori reasoning and conclusions are drawn from certain fundamental assumptions. Deduction method was very popular among the Greeks. Here is an example :

All men are mortal Socrates is a man Socrates is mortal The deductive method moves from the general assumption to the specific application.

Ricardo, a classical economist, made use of the deductive method.

The inductive method moves from specific observations to generalization. It was Francis Bacon who advocated inductive method in scientific enquiry.

None of the above methods provides satisfactory system for solution of problems. So Darwin, who is famous for this theory of evolution, by introducing the concept of hypothesis, has combined deductive and inductive methods.

The important elements of Darwin’s deductive-inductive method are:

1 Identification of a problem

2 formulation of hypothesis (a hypothesis is an assumption or an intelligent guess)

3 collection, organization and analysis of data

4 formulation of conclusions

verification, rejection or modification of the hypothesis after testing it.

Name: Nwokolo Chinedu Emmanuel

Reg no: 2020/242604

Email: emmychi16@gmail.com

There are mainly two basic methods of analysis used by economists :

Deductive method >=> The deductive method is also called abstract, analytical and a priori method and represents an abstract approach to the derivation of economic generalisations and theories. The principal steps in deriving economic generalizations through deductive logic are: (I) perception of the problem to be enquired into (II) defining the principal terms and making appropriate assumptions (III) deducing the hypothesis, and then (IV) testing the hypothesis deduced

Inductive method >=> The inductive method which is also called empirical method derives economic generalisations on the basis of experience and observations. In this method detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalisations which follow from the observations collected.

But, it is worth mentioning that the number of observations has to be large if it can yield a valid economic generalisation. One should not generalise on the basis of a very few observations. There are three ways which can be used for deriving economic principles and theories. They are:

(a) Experimentation,

(b) observations,

(c) statistical or econometric method.

Name:Okolie uchenna Anthony

Course: eco 101

Faculty: VTE

Dept: Business Education

Reg no: 21276005cf

1. Deductive (also analytical abstract or prior method): ,it’s consist of deriving conclusions from general truths ,by taking few general truths applying them to draw to conclusion. In deductive method of Economic Analysis we proceed from the general to the particular. This is also known as an hypothetical method for some of the assumptions may not correspond to actual facts, but very near actual facts which may be used as premise for starting, reasoning and drawing conclusions. In deductive you take the following steps

I.perception of the problem to be inquired into

ii defining of terms (technical terms used in analysis )

iii deducing hypothesis from assumptions

Iv testing of hypothesis

2 inductive method:it’s starts with the particular and moves to the general . It begins with a particular observation and moves to a general explanation ,it collects observations and develops a theory to fit the facts . In inductive method the follow steps are maintained

I observation

Ii formation of hypothesis

ii generalization

Iv verification.

Reg number:20022678IA

Department:Economics

Blog address:Uzoetohclara.blogspot.com

The basic methods of economic analysis are:

*Inductive method

*Deductive method

*Inductive method:It derives economic generalizations on the basis of experience and observations. In this method, detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalizations which follow from the observations collected. It is also known as Empirical method.

Stages of deriving economic generalizations through inductive method are:

*Experimentation

*Observation

*Statistical or econometric method

Advantages of inductive method

*Since it is based on facts, it is more realistic and reliable.

*Using statistical methods and experimentations make the process more scientific, thus more acceptable universally rather than just depending on your own reasoning and logic.

*Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

Disadvantages of inductive method

*If the data used is insufficient and faulty, it would lead to faulty conclusions making the results less reliable.

*It is time-consuming and expensive.

*Collection of all the data is quite stressful and varies from person to person.

*Deductive method:In this method we go from general reasoning to specific analysis. It is also called abstract, analytical and a priori method and represents an abstract approach to the derivation of economic generalizations and theories.

Stages of deriving economic generalizations through deductive method:

*Perception of the problem to be inquired about;He must know the significant variable regarding whose behavior and inter-relationship he wants to derive generalizations.

*Definition of technical terms and making of assumptions;Simplifying assumptions is quite necessary in order to bring out the importance of really significant factors having a bearing on the problem under investigation. It enables us predict things accurately.

*Deducing hypotheses through logical deduction;The hypotheses describes the relationship between factors affecting a phenomenon,it establishes the cause and effect relationship between the variables. Through logical process, hypothesis is deduced from the assumptions made.

*Testing or verification of hypotheses;Two related distinctions must be borne in mind;first, functional relationship between economic variables and a historically sequence of events must be distinguished. Second, the actual course of events is governed by several other factors assumed by a generalization which remains constant under the qualification“other things remaining the same”.

Advantages of deductive method

*It doesn’t involve the use of any complex software analysis, only simple deductive logic is required.

*It focuses upon economic reasoning which is of paramount importance.

Disadvantage of deductive method

*Logical fallacy; if the assumptions happen to be logically flawed, the whole process becomes faulty and would give wrong conclusions.

Conclusion:Both methods of economic analysis are complimentary rather than competitive.

DIKE EMMANUELLA CHINONYEREM

NURSING SCIENCE

20411006FA

The two basic methods of analysis used by Economists are Deductive and Inductive method.

1) Deductive Method; This method deals with assumptions/facts and then arrive at certain conclusions using logical analysis or our own analytical abilities. The stages involved in this method are:

I)Observation of the task/issue- there must be a problem to be solved.Here you define the problem precisely.

II)Making hypothesis-Here you make realistic assumptions that are verifiable(postulates).

III) Testing your hypothesis with more observations.

If the hypothesis gets verified, we get economic principles/laws.This method is a simple method that doesn’t involve any complex software analysis and it focuses on economic reasoning which is very important.

2) Inductive Method:This method formulate principles by using sub-methods (observations, experimentations,statistical methods). The stages involved in this method are;

I) Observation

II) Formulation of hypothesis

III) Generalizing principles

IV) Verifying against actual facts

Since inductive method is based on facts,it is more reliable and realistic. Using statistical methods and experimentations make the process more scientific.

Name :okolie uchenna Anthony

Level :100level

Reg no: 21276005cf

Course :eco 101

Faculty:VTE

Dep: Business education

1. Deductive (also analytical abstract or prior method): ,it’s consist of deriving conclusions from general truths ,by taking few general truths applying them to draw to conclusion. In deductive method of Economic Analysis we proceed from the general to the particular. This is also known as an hypothetical method for some of the assumptions may not correspond to actual facts, but very near actual facts which may be used as premise for starting, reasoning and drawing conclusions. In deductive you take the following steps

I.perception of the problem to be inquired into

ii defining of terms (technical terms used in analysis )

iii deducing hypothesis from assumptions

Iv testing of hypothesis

2 inductive method:it’s starts with the particular and moves to the general . It begins with a particular observation and moves to a general explanation ,it collects observations and develops a theory to fit the facts . In inductive method the follow steps are maintained

I observation

Ii formation of hypothesis

ii generalization

Iv verification.

Name; ONYEABOR FAVOUR CHIDERA

Reg no;20630889HA

Email; onyeaborfavourchidera2020@gmail.com

Deductive analysis; this is an approach concerned with developing a hypothesis based on existing theory and then designing a research strategy to test the hypothesis,it means reasoning from the particular to the general.it begins with an expected pattern that is tested against observation.

Inductive analysis;It refers to the approach that uses detailed reading of raw data to derive concepts and themes.it is used to condense extensive and varied raw data into a brief summary format and to establish clear links between the research objectives and the summary finding derived from the raw data.

Okafor chekwube Veronica. Faculty of health sciences. Department_Nursing sciences. Reg no_2019/251602

OGWO CHERISH IJEOMA

Nursing sciences

20687679HF

The basic methods of analysis used by economists are: Deductive method and Inductive method

1) Deductive method:

This method represents an approach to the derivation of economic generalisation and theories. In order to derive economic generalisations through deductive logic we begin by identifying the problem, defining technical terms and relevant variables, making assumptions, processing of logical deduction to derive implication, formulation of hypothesis, making predictions and testing them and finally making sure the predictions are in agreement with facts.

2) Inductive Method:

The inductive method can also be called Empirical Method. The inductive method derives economic generalisations on the basis of experience and observations. In this method detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalisations which follow from the observations collected.

Deductive method: The deductive method is also called abstract, analytical and a priori method and represents an abstract approach to the derivation of economic generalisations and theories.

(a) Perception of the Problem:

In any scientific enquiry, the analyst or theorist must have a clear idea of the problem to be enquired into. He must know the significant variables regarding whose behaviour and interrelationship he wants to derive generalisations. The perception of the problem is by no means an easy task.

(b) Definition of Technical Terms and Making of Assumptions:

The next step in the process of deriving economic generalisations is to define precisely and unambiguously the various technical terms to be used in the analysis as well as to state clearly the assumptions he makes to derive generalisations

2. Inductive Method:The inductive method which is also called empirical method derives economic generalisations on the basis of experience and observations. In this method detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalisations which follow from the observations collected.

Name: Richard Chisom Emmanuel

Reg no: 20168040CA

Department: PALG

Deductive method: The deductive method is also called abstract, analytical and a priori method and represents an abstract approach to the derivation of economic generalisations and theories.

(a) Perception of the Problem:

In any scientific enquiry, the analyst or theorist must have a clear idea of the problem to be enquired into. He must know the significant variables regarding whose behaviour and interrelationship he wants to derive generalisations. The perception of the problem is by no means an easy task.

(b) Definition of Technical Terms and Making of Assumptions:

The next step in the process of deriving economic generalisations is to define precisely and unambiguously the various technical terms to be used in the analysis as well as to state clearly the assumptions he makes to derive generalisations

2. Inductive Method:

The inductive method which is also called empirical method derives economic generalisations on the basis of experience and observations. In this method detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalisations

Name: Ikechukwu fearGod chinedu

Department: philosophy

Email: bishopfeargod@gmail.com

The economics methods are:

a. Inductive method and

b. Deductive method

A..Inductive Method:

This type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical method.

b. Deductive method of economic analysis involves the process of reasoning analytical and inferring what must necessary follow from a given set of statement that the present will be like the past and the future will be like the present thought not full assured as change remain constant.

Okeke Juliet Kelechi

21331434JA

Economics dept.

mhizjuliette24@gmail.com

The basic method of economics analysis used by economists are mainly two which are:

(a) Inductive method

(b) Deductive method

(a)Inductive method: it involves the process of reasoning from particular facts to forming a general principle i.e begins with particular observations and moves to general explanations. Inductive method process can be illustrated as thus :

Observation of the issue——->Formulation of hypothesis——->Generalizing principles——>Verifying principle against actual fact.

(b)Deductive method: It involves the process of reasoning from general principles to a particular fact. It derives new conclusion from existing general theories/principles. Deductive method process can be illustrated as thus:

Observe an existing theory——-> Formulate hypothesis based on existing theory——-> collect data to verify the hypothesis——-> analyse if the collected data supports the hypothesis.

Name: Caroline Jessica Okeke

Department: Sociology & Anthropology

Matric number: 2020/242834

Email address: carolinejessicaokeke@gmail.com

METHODS OF ECONOMIC ANALYSIS

Every economic analysis necessitate the articulation of laws and conceptions through two methods:

– Deductive reasoning.

-Inductive reasoning.

DEDUCTIVE REASONINGThis method is important for economists as it focuses upon economic reasoning which is of paramount importance.

In this method of reasoning we start from assumptions, thus, if the assumptions happen to be logically flawed the whole process becomes faulty and would give wrong conclusions. Thus, the logical fallacy is a disadvantage of this method.

It begins from undisputed straightforward or introductory facts and then results to resolutions ( construct a hypothesis or theory) using logical analysis or our own analytical abilities. In other words, it is also called a priori reasoning.

In this form of reasoning, we have 3 stages of deductive reasoning:

– Researching a task.

– Creating hypothesis.

-conducting a test on the hypothesis researched.

This reasoning provides a hypothesis and it is being verified, it results to general economic principle or law.

ADVANTAGES OF DEDUCTIVE REASONING

It is a simple method. It does not involve the use of any complex software analysis, etc. only simple deductive logic is required.

DISADVANTAGES OF DEDUCTIVE REASONING

INDUCTIVE REASONING

This form of reasoning moves from facts to theory. First, Data collection is performed and then providence of evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods.

Data collection of a particular economic theory and then conclusions are drawn. The stages in this method are:

-Observation.

-Formulation of a hypothesis.

-Generalizing principles.

-Verifying against actual facts.

ADVANTAGES OF INDUCTIVE REASONINGSince the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

Since it is based on facts it is more realistic and reliable.Using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

DISADVANTAGES OF INDUCTIVE REASONING

If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable. It is a time-consuming process and thus expensive as well. The collection of all the data is not an easy job and varies from person to person. As to how they collect data.

NAME: ONYEFULU CHIAMAKA LILIAN

MATRIC. NUMBER: 2018/250299

DEPARTMENT:NURSING SCIENCES

FACULTY: HEALTH SCIENCES AND TECHNOLOGY

METHODS OF ECONOMICS ANALYSIS:-In every formulation of generalization, formulations of laws there are steps and methods used to analyze it

THERE ARE BASICALLY TWO METHODS OF ECONOMICS ANALYSIS :

1. Deductive Method

2. Inductive Method.

1. Deductive Method: can also be called abstract, analytical and a prior method which represents an abstract approach to derivation of economics generalization through deductive logics.

STEPS USED IN DEDUCTIVE METHODS OF ECONOMICS ANALYSIS ARE:

1. Perception of the problem

2. Precise definition of technical terms and making of assumption(postulates)

3. Deduction of hypotheses

4. Testing of deduced hypotheses.

1. PERCEPTION OF THE PROBLEM: Is any scientific research, the analyst must have a clear idea of the problem to be researched on. There must be significant variables known to him in accordance to the thing he want to derive generalization on.

2. PRECISE DEFINITION OF TECHNICAL TERMS AND MAKING POSTULATE: This is the next step in deductive economic analysis, It involves explicit definition of various technical terms to be used in the analysis and clearly stating assumptions. Assumptions may be behaviors pertaining to the behavior of the economic variables or they can be technically related.

3. DEDUCTION OF HYPOTHESES: Hypotheses are deduced from the assumptions or premises taken. Hypothesis explains relationships between factors affecting a phenomenon and establishes cost and effect relationships between variables.

4 TESTING OF HYPOTHESES: This means verification of the hypotheses and once hypotheses is verified it can be established as generalization or principle of economics.

INDUCTIVE METHOD OF ECONOMICS ANALYSIS: It can also be called empirical method, it derives economic generalization based on experience and observations. It does not accommodate few observations, it can only be done when very large observations has been made. It uses statistical or Econometric methods.

STEPS USED IN INDUCTIVE METHOD OF ECONOMICS ANALYSIS

1.Perception of the problem

2. Precise definition of technical terms and making assumptions

3. Collection of data about the variables

4. Processing of data collected

5. Deduction of hypotheses

6. Testing of hypotheses

1. PERCEPTION OF THE PROBLEM: This is the first step in any scientific research, there must be clear known problem and significant variables known in accordance to the problem.

2. PRECISE DEFINITION OF TECHNICAL TERMS AND MAKING ASSUMPTIONS: it involves simple definition of various technical terms in relation to the course of analysis

And clearly stating the assumptions

3. COLLECTION OF DATA ABOUT THE VARIABLES: Datas should be collected about the variables related to the problem.

4. PROCESSING OF DATA COLLECTED: This helps in finding out the relationships between the variables gathered and doing some preliminary thinking on the possible functional relationships between the relevant variables.

5. DEDUCTION OF HYPOTHESES: Hypotheses are deduced from the data processed or premises taken. Hypothesis describes relationship between affecting phenomenon. One should endeavor to avoid logical fallacies in this process.

TESTING OF HYPOTHESES: This means verification of hypotheses, when verified it can be established as generalization.

There are two basic Methods Involved in Economics Analysis Namely:

1. Deductive Method

2. Inductive Method

1. Deductive Method- the method Derives new Conclusion from the fundamental assumption established by other methods.As a Deductive method,it has a prior Reasoning, certain laws and principles which are assumed to be the analysis of fact .

In Deductive Method,it involves Information, pattern,tenative Hypothesis etc

2. Inductive Method- this method Comes with specific details and ends with an abstract.

The mode of learning becomes more interesting at the outset because of the references students begin with In what they know.

Inductive Method comprises of the theory, hypothesis, observation and confirmation.

Name: umeh success precious

Department: social science education

Reg no:20027052GA

Email: successprecious41@gmail.com

Method of economic analysis is classified into two methods which is 1. Deductive method 2.inductive method

1.deductive method: it starts from unchallenged elementary assumptions and then arrive at conclusions using logical analysis.

It’s stages are:

1.observation of tasks (realistic ones)

2.making the hypothesis

3.testing the hypothesis using more observation.

If this hypothesis gets verified we get general economic principles or laws.

2.inductive method: this type of reasoning flows from facts to theory. First we collect information then move towards providing evidence using economic theories and facts.

Data is collected about a particular economic theory and then conclusion is drawn.

The stages are:

1.observation

2.fomulating of a hypothesis

3.generalizing principles

4.verifying against actual facts.

The basic methods of analysis used by economists are: Deductive method and Inductive method

1) Deductive method:

This method represents an approach to the derivation of economic generalisation and theories. In order to derive economic generalisations through deductive logic we begin by identifying the problem, defining technical terms and relevant variables, making assumptions, processing of logical deduction to derive implication, formulation of hypothesis, making predictions and testing them and finally making sure the predictions are in agreement with facts.

2) Inductive method:

The inductive method can also be called Empirical Method. The inductive method derives economic generalisations on the basis of experience and observations. In this method detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalisations which follow from the observations collected.

Name: Caroline Jessica Okeke

Department: Sociology & Anthropology

Matric number: 2020/242834

Email address: Carolinejessicaokeke@gmail.com

METHODS OF ECONOMIC ANALYSIS

Every economic analysis necessitate the articulation of laws and conceptions through two methods:

– Deductive reasoning.

-Inductive reasoning.

DEDUCTIVE REASONING

It begins from undisputed straightforward or introductory facts and then results to resolutions ( construct a hypothesis or theory) using logical analysis or our own analytical abilities. In other words, it is also called a priori reasoning.

In this form of reasoning, we have 3 stages of deductive reasoning:

– Researching a task.

– Creating hypothesis.

-conducting a test on the hypothesis researched.

This reasoning provides a hypothesis and it is being verified, it results to general economic principle or law.

ADVANTAGES OF DEDUCTIVE REASONING

It is a simple method. It does not involve the use of any complex software analysis, etc. only simple deductive logic is required.

DISADVANTAGES OF DEDUCTIVE REASONING

INDUCTIVE REASONING

This form of reasoning moves from facts to theory. First, Data collection is performed and then providence of evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods.

Data collection of a particular economic theory and then conclusions are drawn. The stages in this method are:

-Observation.

-Formulation of a hypothesis.

-Generalizing principles.

-Verifying against actual facts.

ADVANTAGES OF INDUCTIVE REASONING

Since it is based on facts it is more realistic and reliable.Using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

DISADVANTAGES OF INDUCTIVE REASONING

If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable. It is a time-consuming process and thus expensive as well. The collection of all the data is not an easy job and varies from person to person. As to how they collect data.

Name- Ezekwem Armstrong

Reg number-20856269GA

Department- philosophy

Email address- armstrongezekwem@gmail.com

Faculty-sociail sciences

Economic analysis involves the formulation of laws and generalization through two methods (a) Deductive (b)inductive.

(1)Deductive method is also called a priori reasoning.it is also called abstract,analytical and represents an abstract approach to the derivation of economic generalisations and theories.it is also seen as a conclusion after having interpretations from premises.in this kind of reasoning we go from a general to specific.

The stages in deductive includes (i) observation of a task or issue,making the hypothesis.

(ii)Testing the hypothesis using more observations etc.

It is a simple method that doesn’t involve the use of any complex software analysis etc.

(2)Inductive methods which is also called empirical

Method derives economics generalisations on the

Basis of experience and observation.

In this method, detailed data are collected with regardes,a certain economics phenomenon and effort is then made to arrive at certain generalisations which follow from observations collected.but it is worth mentioning that the number of observations has to be large if it can yield a valid economic generalization.one should not generalize on the basis of a very few observations.

The deductive profiling method relies on the

application of deductive reasoning to the observable evidence.investigators collect general information about something base on the profilers experience, knowledge and critical thinking.

The deductive method involves several distinctive steps

(a)A problem is stated

(b) information is collected

(c)A working hypothesis is formulated

(d) The hypothesis is tested

(e)Result of the test are examined

(f) one or more conclusions are reached

NAME: Onah Ujunwa Charity

FACULTY: Health Sciences

DEPARTMENT: Nursing Science

JAMB REG NUMBER: 20642591IA

METHODS OF ECONOMIC ANALYSIS

They are:

1. Deductive Method

2. Inductive Method

1.Deductive Method:

The deductive method is also known as the abstract or analytical method. In this method, conclusions are derived from general truths, i.e. it proceeds from general to particular. The classical and neo-classical school of economists such as Ricardo, Mill, Malthus, Marshal, Pigou, etc. applied the deductive method in their economic investigations.

In Deductive method of Economic Analysis we proceed from the general to the particular. This is also known as an hypothetical method for some of the assumptions may not correspond to actual facts, but very near actual facts which may be used as premise for starting, reasoning and drawing conclusions. In economics we start with very simple premises and work up gradually or more and more complex hypotheses.

A complete form of deductive method consists of three stages, viz.,

observation;

deductive reasoning and

instance and testing by means of further observations.

MERITS OF DEDUCTIVE METHOD

1. Deductive method is exceedingly simple. For example, the law that the utility derived by an individual from a commodity goes on diminishing with every successive addition is a self-evident truth from which we may draw many logical conclusions, viz., larger the stock of money, the lower shall be the utility of money; rich persons have lesser marginal utility of money than the poor people; so taxes should not be levied on proportional basis. If taxes are levied proportionately, the sacrifice of the poor will be larger than the rich.

2. Deductive method obviates the necessity of experimentation. Economics being a social science, experimentation may not be available as in the case of physics or chemistry. So, the next best alternative to experiment is deductive reasoning.

3. The deductive method results in accuracy and exactness in generalization, because of logical reasoning. The method gives a very high standard of precision in abstract economic reasoning.

DEMERITS OF DEDUCTIVE METHOD

1. Deductive generalizations started on wrong premises will be dangerous when such generalization claim universal validity. Then such faulty generalizations are made use of in framing government policies, the results would be nothing but disastrous. For example, J.B.Say, claimed universal validity for his ‘Law of Markets’ in which he maintained that supply creates its own demand and there will not be over-production in the market. But this celebrated ‘Law of Market’ was torn to pieces when critics proved that Say’s Law was wrong and overproduction would be possible.

2. In deduction there is too much of abstraction and economists by means of their intellectual exercises produce only “intellectual toys” having little connection with reality.

3. Deduction is based mainly on assumptions which are perfectly valid. If assumptions are wrong, generalizations made on the basis of wrong assumptions will be imperfect and invalid.

2. INDUCTIVE METHOD

In this method, economists proceed from a practical angle to problems of science to reduce the gulf between theory and practice. Induction is done by two forms, viz. experimentation and statistical form. Facts are collected first, arranged and conclusions are drawn. Then these general conclusions are further verified with reference to actual facts.

Further, the method of statistical induction is indispensable for the formulation of economic policy. Malthus presented his famous theory of population only after studying the facts of population in various countries; He then used statistics to support his theory. Similarly Engel, the German statistician employed inductive method and used statistics to formulate his law of consumption.

MERITS OF INDUCTIVE METHOD

1. It is highly practical add realistic as it describes things as they are.

2. It is helpful in verifying the conclusions of the deductive method.

3. Economic laws under this method are not universal but valid only under certain conditions.

DEMERITS OF INDUCTIVE METHOD

1. When the investigators lack a balanced judgement there is the risk of drawing hurried conclusions based on inadequate and irrelevant facts and data.

2. Collection of facts in the inductive process is a highly complex and complicated job warranting extraordinary understanding to alienate economic from non-economic factors.

3. Mere induction alone will not deliver goods unless it is supplemented by means of deductive reasoning. Without deduction, the inductive method would result in producing only a mass of unrelated and unconnected facts.

Name: OBI AMARACHI CELESTINA

Reg No: 20855804BA

Dept: PALG

Matric No: 2020/243303

Email: amaratina20@gmail.com

1 Inductive method: The inductive method which is also called empirical methods drives economic generally on the basis of experienment and observation. Therefore inductive method or reasoning is a type of method or reasoning that involves drawing a general conclusion from a set of specific observations. In this method is detailed data are collected with regard to a certain economic phenomenon and efforts is made to arrive at a certain generalizations which follows from the observations collected.

There are three ways which can be used for driving economic principles and theories

1 Experiementation

2 Observations

3 statistical or econometric methods.

Various steps in inductive method

1 the first step is to identify the problems.

2 The second step is defining technical and variables related to the problem

3 the third step which is very important in the inductive method is the collection of data about the variables related to the problem and doing some preliminary thinking about the possible functional relationships between the relevant variables.

4 Another important step is the constructions of economic theories: this is processing of data collected and finding out what relations between the variables actually hold good.

2 Deductive method: In deductive method of economic Analysis, we proceed from general to the particular. This is also known as an hypothetical method for some of the assumptioms may not correspond to actual facts, but very near actual facts which may be used as premise for starting, reasoning and drawing conclusions.

The Deductive method drives new conclusions from fundamental assumptions or from the truth established by other methods. It involves the process of reasoning from certain laws or principles, which are assumed to be true to the analysis of facts.

They are steps of driving economic generalizations through deductive method:

1 perception of the problem to be enquird into: the analyst must have a clear idea of the problem to be enquird into, in order not to make mistakes.

2 Definition of technical terms and making of assumptions

Deducing hypotheses, that is driving conclusions from the premises through the process of logical reasoning

4 Testing hypothesis deduced.

Deductive reasoning :Deductive method is also known as abstract or analytical method. This method is based on a priori reasoning and conclusions are drawn from certain fundamental assumptions. It moves from general assumption to the specific application. The reasoning gives hypothesis which when verify gives economic principles or laws.

Inductive reasoning : Inductive method moves from particular facts to generalization.The facts are collected first, arranged and conclusions are drawn. The general conclusions are further verified with reference to actual facts.

Name: umeh success precious

Department :social science education

Reg no:20027052GA

Email:successprecious41@gmail.com

In economic analysis two methods are being used 1. The deductive method 2.the inductive method.

1.deductive method: it starts from unchallenged elementary assumption and then arrive at conclusions using logical analysis or our analytical abilities. It is also called abstract, analytic method and a priori reasoning.

The stages are:

-observation of a task (realistic one)

-making the hypothesis

-testing the hypothesis using more observation

Note: if this hypothesis gets verified we get general economic principles or laws.

2.inductive method: this type of reasoning flow from facts to theory. First we collect information and then move towards providing evidence using economic theories and facts.

Data is collected about a particular economic theory then conclusion is drawn.

The stages are:

-observation

-formulation of a hypothesis

-generalizing principles

-verifying against actual facts.

name ::uzormechina wisdom udodirichukwu

Matri number ::2020/243134

Department :: public administration and local government

Gmail :: wisdomuzormechina@gmail.com

*The two method of economic analysis are*

1. Deductive method

2. Inductive method

(1). Deductive method ::: this is also called a “prior reasoning ” we start by perceiving the problem, give an analysis into the problem, observe the problem, define precisely the technical terms, “based on the definition ” you make hypotheses (assumption), then the assumption at this stage becomes a postulate, test your hypotheses (this is to know it it will be accepted or rejected), then if the hypotheses gets verified it becomes a theory.

(2). Inductive method ::: this method also known as empirical method that derives generalization. It is also involves the collection of facts, drawing analytic conclusion with them and testing if with other facts.

There are basically three ways for deriving economic priciciple and theories they are

1. Experimentation ::: this uses econometri package like e-views, strata.

2. Observation :: you observe your hypotheses

3. Econometri methods ::: makes use of statistical tools and economic theories in combination to estimate the economic variable and to forecast the intended variables.

Name: Ugwu adanna chiamaka

Jamb registration number: 20694893BA

Department: public administration and local government.

Email: ugwu.adannachiamaka@gmail.com

METHOD OF ECONOMIC ANALYSIS

There are two basic methods of economic analysis namely

I Deductive method

ii Inductive method

DEDUCTIVE: The deductive method is also called abstract, analytical and a priori method and represents an abstract approach to the derivation of economic generalisations and theories.

The principal steps in the process of deriving economic generalisations through deductive logic are:

(a) Perception of the problem to be enquired into;

(b) Defining precisely the technical terms and making appropriate assumptions, often called postulates or premises;

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(c) Deducing hypotheses, that is, deriving conclusions from the premises through the process of logical reasoning; and

(d) Testing of hypothesis deduced.

VARIOUS STEPS IN DEDUCTIVE METHOD

1 identify the problem

2 Defining technical terms and relevant variables

3 Making Assumption

4 process of logical deduction to derive implications

5 Formulation of hypothesis

6 Making predictions and testing them

7 Predictions are in agreement with facts.

2. Inductive Method:The inductive method which is also called empirical method derives economic generalisations on the basis of experience and observations. In this method detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalisations which follow from the observations collected.

But, it is worth mentioning that the number of observations has to be large if it can yield a valid economic generalisation. One should not generalise on the basis of a very few observations. There are three ways which can be used for deriving economic principles and theories.

They are:

(a) Experimentation,

(b) observations,

(c) statistical or econometric method.

Various Steps in Inductive Method:

Various steps are gone through in developing economic theories through inductive method. The first step, as in the deductive approach, is to identify the problem. The second step is defining technical terms and variables related to the problem.

It is the next step which is peculiar to the inductive method, namely, the collection of data about the variables related to the problem and doing some preliminary thinking about the possible functional relationships between the relevant variables.

The next important step in the construction of economic theories in this method is the processing of data collected and finding out what relations between the variables actually hold good. From this, a theory is developed which can be further refined and tested through statistical methods.

Once the theory has been developed one can make predictions on its basis, as is done in the deductive approach. If predictions of theory are in agreement with the facts and actual behaviour of the economy, then a new reliable theory has been developed. If a new theory explains “how things work” better than the existing ones, it replaces them.

Conclusion: Integration of Two Methods:

Now, the controversy which existed among the earlier economists as to whether deductive or inductive approach is more appropriate in developing economic theories and principles has been resolved. The modem viewpoint in this regard is that both are needed for the proper development of scientific economic theories. Indeed, the two are complementary rather than competitive.

Name.Chukwuma Ogochukwu susan

Department. Combined social science

Course. Eco 101

Reg number. 242910

The method of economics analysis are

Deductive method

Inductive method

Deductive method is also the analytical abstract or prior method. It derives conclusion from general truths takes few general principles and applies conclusions.

Steps in deductive method

1 perception of the problem to be inquired into

2 Defining of terms

3 Deducing hypothesis from the assumption

3 Testing of hypothesis

Inductive method, it lnvolves the process of reasoning from particular facts to general principle. It derives economic generalization in the basis of experimentations, observation and statistical methods.

Steps in inductive method

Observation

Formation of hypothesis

Generalization

Verification

The basic methods of economic analysis used by Economists are:

A. Deductive method

B. Inductive method

A. Deductive method: It is also known as abstract method.

It consists in deriving conclusions from general truths.

It takes a few general principles and applies them,then draws conclusions.

The classical and neo-classical school of Economists like J.S Mill,Malthus,applied this method in their economic investigations.

Steps of Deductive method

1. Perception of the problem to be inquired into: i.e the economist must have a clear and precise idea of the problem to be inquired.

2. Defining of terms: i.e to define clearly the technical terms used in analysis. Further assumptions made by the theory are then made precise.

3. Deducing hypothesis from the assumptions.

4. Testing of hypothesis: i.e verification of hypothesis through direct observation in the real world ,and statistical methods.

Merits of Deductive method

1. It is near to reality,less time consuming,less expensive.

2. Mathematical techniques are used in deducing theories of economics,which brings exactness and clarity in economic analysis.

3. The method is analytical

4. It helps in deriving economic theories using limited scope of experimentation.

Demerits of Deductive method

1. It is simple and precise only if the assumptions are VALID. More often ,the assumptions turn out to be half truths and are misleading,or have no relation to reality.

2. The method is highly abstract,and requires a great deal of care,to avoid bad logic and faulty economic reasoning.

3. Prof Learner described it as “armchair analysis” i.e the premises from which inferences are drawn,may not hold good at all times.

B. Inductive method

It is also called empirical method. It was adopted by the “Historical School of Economists”. It involves the process of reasoning from particular facts to general principles. It derives economic generalization on basis of:

i. Experimentation

ii. Observation

iii. Statistical methods

In this method,data is collected about a certain economic phenomenon, systematically arranged,and conclusions are drawn.

Steps of Inductive method

1. Observation

2. Formation of hypothesis

3. Generalization

4. Verification

Merits of Inductive method

1. It is based on facts. The method is realistic.

2. The method is more reliable because it makes use of statistical techniques to test economic principles.

3. The method is dynamic.

4. The method helps in future investigations.

Demerits of Inductive method

1. If conclusions are drawn from insufficient data,the generalizations may be faulty.

2. The collection of data is a difficult task and the method employed differs from investigator to investigator. This may lead to different results for same problem.

3. The method is time consuming and expensive.

CONCLUSION

Both methods have weaknesses. We cannot rely exclusively on any one. Modern Economists are of the view that the methods are complimentary. We can apply any or both,as situation demands.

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Basic methods of analysis used by economist.

1. Deductive method: this is also called abstract method,it represents an abstract approach to the derivation of economic theories. There are certain steps used in deriving these theories and they are;

a. Perception of the problem to be enquired,

b. Defining the technical terms and making appropriate assumptions,often called postulates,

c. Deducing hypothesis,deriving conclusions through logical reasoning,

d. Testing of hypothesis deduced.

2. Inductive method: also called empirical method. This method derives economic generalizations on the basis of experience and observations. Data are collected with regard to a certain economic phenomenon and efforts is then made to arrive at certain theories that follows from the observations.

Ways used for deriving economic principles and theories;

a. Experimentations,

b. Observations,

c. Statistical or econometric method.

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Inductive reasoning is a method of reasoning in which premises are viewed as supplying some evidence,but not full assurance,of the truth of conclusion.it is also described as a method where one’s observation and experience including what is learned from others are synthesized to come up with a general truth.

Deductive reasoning,also known as deductive logic,it is the process of reasoning from one or more statements to reach a logical conclusion as that of contributional, and links premises with conclusion.

THE_DEDUCTION_METHOD.

This method as the name implies involves the

reseaoning from the general to the particular. The deductive method provides us with new results from fundamental assumptions or from facts established by other methods. It involves the process of reasoning from certain laws or principles, which are assumed to be true, to the analysis of facts.

Then inferences are drawn which are verified against observed facts. #BACON himself described deduction method as a “descending process” in which we proceed from a general principle to its consequences. Mill characterised it as a priori method, while others called it abstract and analytical.This reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws.

The stages in deductive reasoning are:

Observation of a task/ issue

Making the hypothesis

Testing the hypothesis by being very observate.

#MERITS_OF_DEDUCTION_METHOD .

1. This method only requires simple,deductive and logic work or reasoning.

2. It helps economists as it focus upon economic reasoning which is overriding.

#DEMERITS_OF_DEDUCTION_METHOD.

1.This method starts or is headed by an assumption, therefore a faulty conclusion is drawn from any and all assumptions wrongly made.

#THE_INDUCTION_METHOD.

It can be described as a reasoning which takes place in an ascending order. Here facts are collected, arranged, analysed and then conclusions are drawn from these facts. This method can also be called the #HISTORICAL_METHOD. This very method requires the economist to draw gereralisations, and verify the conclusions by applying them to subsequent events.

#Stages involved here are:

Observation

Formulation of a hypothesis

Generalizing principles

Verifying against actual facts.

#MERITS_OF_THIS_METHOD.

1. It is based on facts therefore inference drawn from it is more realistic and reliable than that of the #DEDUTION_METHOD

2. Statistical methods and experimentations are employed here, making the process more scientific, thus, more acceptable universally.

#DEMERITS_OF_INDUCTION_METHOD

1. Once the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

2. It is a time-consuming process and thus expensive as well.

NAME: UGWUADA SAMUEL MMADUKAIHE

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There two method used in economics analysis.;they are.

No 1.

DEDUCTIVE METHOD: This is also called priori or abstract method. here we start unchallenged elementary or redimentary assumption, then arrive at conclusion.

Stages that it take to reach conclusion are.

a. Observation of task or issue.

b. Making appropriate assumption, often called postulates or premises.

c. Making the hypothesis

C. Testing the hypothesis using more observations.

No 2.

INDUCTIVE METHOD; this type of generalizations flows from facts to theory.it also refers as empirical method.

In inductive method the economist collect information and facts and then move towards providing evidence using economic theory and facts.

This method formulates principles using the sub-methods like. Observation, experimentations, statistical methods.

There are many stages economist can arriveus at his theory are;

a.Observation

b. Formulation of a hypothesis

C. Generalizing the principles

D. Verifying against actual facts.

PURE AND INDUSTRIAL CHEMISTRY

INDUCTIVE REASONING is a type of reasoning that involves drawing a general conclusion from a set of specific observation.

Advantages of Inductive Reasoning

1. It provides first hand knowledge and information by actual observation.

2, it is future oriented. It gathers specific

information, then draws a general conclusion which predicts what will be found in the future.

3. It increases the creativity of the research.

Disadvantages of Inductive Reasoning

1. It is limited in scope, and inaccurate inference (false conclusions)

Example of inductive Reasoning: ” Pearl leaves for school 7 am, Pearl is always early.”

DEDUCTIVE REASONING is the process of reasoning from one or more statements to reach a logical conclusion. Or a type of logical thinking that starts with general idea and specific conclusion.

Advantages of Deductive Reasoning

1. It is a downward process of thoughts, and leads to useful results.

2. It is straight and to the point.

3. It is less time consuming.

4. It allows more time for practice and application.

Disadvantages of Deductive Reasoning

1. It does not give any new knowledge, because its premises are already tested. It only proves the past or present truths.

2.it is reduced merely to a method for verification.

3. It encourages dependence on other resources.

Example of Deductive conclusion: ” All men are mortal. Raymond is a man”. Therefore, Raymond is mortal.

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Matric no :2020/242141.

Email address: sylvanusfavouchi7@gmail.com

Department: Business education.

METHODS OF ECONOMIC ANALYSIS

Any economic analysis involves the formulation of laws and generalizations through two methods: Deductive and Inductive.

Inductive method: is also called empirical method .it involves the process of reasoning from particular facts to general principle. It also makes use of econometric packages.This method derives economic generalization on the basis of:

*Experimentations

*observations

*Statistical methods.

Deductive method:In deductive method of economic analysis we proceed from the general to the particular or main.This is also known as hypothetical method for some of the assumptions may not correspond to actual facts,but very actual facts which may be used as premise for starting, reasoning and drawing conclusions.

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DEPARTMENT: Pure and Industrial Chemistry.

The methods of economic analysis used by economists includes:-

Inductive method and Deductive method.

• INDUCTIVE METHOD:

Theory~hypothesis~observation~confirmation.

This type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods.Data is collected about a particular economic theory and then conclusions are drawn. The stages in this method are:

×Observation

×Formulation of a hypothesis

×Generalizing principles

×Verifying against actual facts.

This method has it’s advantages and disadvantages,This is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

This reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws.

Its advantages includes:

-Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

-Since it is based on facts it is more realistic and reliable.

-Using statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

Its disadvantages includes:

-It is a time-consuming process and thus expensive as well.

-The collection of all the data is not an easy job and varies from person to person. As to how they collect data.

-If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.

• DEDUCTIVE METHOD:

Information~pattern~tentive hypothesis~theory.

×Observation of a task/ issue

×Making the hypothesis

×Testing the hypothesis using more observations, etc.

This method also has its advantage and disadvantage.

Its advantages includes;

-This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

-It is a simple method, doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

Its disadvantage is the fact that in this method of reasoning we start from assumptions, thus, if the assumptions happen to be logically flawed the whole process becomes faulty and would give wrong conclusions. Thus, the logical fallacy is a disadvantage of this method.

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Reg number:20690143BA

Dept: Public Administration and Local Government

METHODS OF ECONOMICS ANALYSIS

An economic theory derives laws or generalization through two methods

(1) Deductive method and

(2) Inductive method.

These two ways of deriving economic generalizations are now explained in brief:

(1) Deductive method of Economics Analysis:

The Deductive method is also named as analytical, abstract,prior method.The deductive method consists in deriving conclusion from general truth , takes few general principles and applies them draw conclusions.

Inductive method of Economics Analysis:

Inductive method which is called empirical method was adopted by the Historical school of Economist .It involves the process of reasoning from particular facts to general principles.

This method derives economic generalization on the basis of

(1) Experimentations

(2)Observations and

(3)Statistical methods

In this method, data is collected about a certain economic phenomenon .

These are systematically arranged and the general conclusion are drawn from them

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Dept: Business Education

Reg No: 21362016DF

Email: okechukwuprecious960@gmail.com

Questions

What are the basic methods of analysis used by Economists? Briefly and convincingly discuss each of them.

Answers:

Any economic analysis involves the formulation of laws and generalizations through two methods- deductive and inductive.

1. Deductive reasoning

2. Inductive reasoning.

* The Deductive reasoning otherwise known as a priori reasoning. We begin with unquestioned basic or rudimentary assumptions/facts and then use logical analysis or our own analytical ability to get conclusions (create a hypothesis or theory).This reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws.

We proceed from general to specific in this type of reasoning.The stages in deductive reasoning are:

-Observation of a task/ issue

-Making the hypothesis

Testing the hypothesis using more observations, etc.

*The inductive method involves collection of facts, drawing conclusions from them and testing the conclusions by other facts. On the basis of experience and observation, the inductive technique, also known as the empirical method, develops economic generalization.

Experimentation, observation, and statistical or econometric methods are the three methods that can be used to derive economic principles and hypotheses.

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1. Deductive MethodThis is also called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

Making the hypothesis

Testing the hypothesis using more observations, etc.

Advantages of Deductive MethodIt is a simple method, doesn’t involve the use of any complex software analysis, etc. only simple deductive logic is required.

This method is important for economists as it focuses upon economic reasoning which is of paramount importance.

Disadvantages of Deductive Method

2. Inductive MethodThis type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods.

Observation

Formulation of a hypothesis

Generalizing principles

Verifying against actual facts.

Advantages of Inductive MethodUsing statistical methods and experimentations makes the process more scientific, thus, more acceptable universally rather than just depending on your own reasoning and logic.

Since the economic environment is dynamic and always changing, relying upon a more scientific method always helps reach logical conclusions.

Since it is based on facts it is more realistic and reliable.

Disadvantages of Inductive Method

If the data used is insufficient and faulty it would lead to faulty conclusions, making the hypothesis less reliable.The collection of all the data is not an easy job and varies from person to person. As to how they collect data.

It is a time-consuming process and thus expensive as well.

Eco101

Name: Onyeoma Cynthia Amarachi

Reg No: 2019/241511

Department: Pure and industrial chemistry

Email: Amarachi.Onyeoma241511@unn.edu.ng

Topic: what are the basic methods of analysis used by economist

The basic method of analysis used by economist are as follows:

1. Deductive method analysis

2. Inductive method analysis

Deductive method analysis:- it can also be called priority reasoning. In the sense that we go from general to specific, that is we start from unchallenged elementary facts and then arrives at conclusions using our own analytical ability. The stages in deductive reasoning are listed below.

– Observation of a task or issue which automatically leads to appropriate assumption.

– making the hypothesis which is deriving into conclusion through the process of logical reasoning.

– Testing the hypothesis deducted using more observation

Inductive method analysis:- It can also be called empirical method. In this type of reasoning, collection of information and facts providing evidence using economic theory and facts. Data is collected about a particular economic theory before conclusion.

The stages in this method are as follows:-

– Observation

– formulation of a hypothesis

– Generalizing principles

– Verifying against actual facts

Name: Assi Sylvia Idara

Reg no.: 2019/243322

Department: pure and industrial chemistry

The two methods used by economists are:

1. Inductive reasoning

2. Deductive reasoning

1. Inductive reasoning: it is a type of logical thinking that involves forming generalizations based on specific incidents you’ve experienced, observations you’ve made, or facts you know to be true or false.it is an important critical thinking skill that many employers look for in their employees. Bacon described it as “an ascending process”. It expects the economist to be primarily an economic historian who should first collect material, draw generalizations and verify the conclusions by applying them to subsequent events. Inductive reasoning is dynamic, realistic, future enquiries and statistical method. It’s demerit is: it is time consuming and expensive.

2. Deductive reasoning: is an inference from the general to the particular or from the universal to the individual. The deductive method derives new conclusions from fundamental assumptions or from truth established by other methods. It involves the process of reasoning from certain laws or principles, which are assumed to be true, to the analysis of facts, then inferences drawn which are verified against observed facts. Bacon described deductive reasoning as “a descending process ” in which we proceed from a general principle to it’s consequences. Deductive reasoning is real, simple, powerful and exact. It’s demerit is: it is based on assumptions and it is abstract

THE BASIC METHOD OF ANALYSIS USED BY ECONOMISTS . . An economy theory derives laws or generalization through two methods.

1.Deductive method. 2.inductive method.

Deductive method of economic analysis- the deductive method is also called analytical, abstract, or prior method .it represent an abstract approach of economic generalization and theories. Deductive method may involved steps which aids in deriving economic generalization. They are perception of the problem to be inquired into that is the analyst must understand ,interpret and be able to have a clear idea of the problems he is to handle..

Secondly the next step is to define clearly the technical term used in analysis ,further assumption made for a theory should also be precise. The third step in deriving generalization is making hypothesis from the assumption taken.

Finally before establishing laws or generalization, hypothesis should be verified through direct observation and through statistical method. Merits of Deductive methods– it is time consuming and brings exactness and clarity in economic analysis, it also help in deriving economic theories.. Shortcomings or demerits of deductive methods-it is highly demerited because it requires a great deal of care to avoid bad logic and faulty economic reasoning and other highly unrealistic assumptions which may not have operational significance.

INDUCTIVE METHOD. This is also called the empirical method which derives economic generalization on the basis of experience and observation..the observation has to be large to yield a valid economic generalization. There are three steps which can be used for deriving economic principle and theories they are 1.experimentation

2.observation

3.statistical method.

Main step involved in the application of inductive method are observation that is a collection of data then making of hypothesis followed by generalization and lastly verification.

Inductive method is based on facts, that is the method is realistic, further more inductive method is more reliable and is also dynamic and mosty helps in future investigation. These are merits of inductive method.

It shortcomings or demerit that weakens the method are when conclusion are drawn from insufficient data the generalization obtained may be faulty.

Secondly it is time consuming and also the method or source of collection of data differs from investigators to investigators.

In conclusion deductive and inductive method have both weaknesses and we cannot rely exclusively on any of them but they are highly needed for scientific thought and analysis.

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Department: Nursing/Nursing sciences.

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METHODS OF ECONOMIC ANALYSIS.

The basic methods of analysis used by economics are;

1. Deductive method.

2. Inductive method.

1. DEDUCTIVE METHOD OF ECONOMIC ANALYSIS.

The deductive method is also named as analytical, abstract or prior method. The deductive method consists in deriving conclusions from general truths, takes few general principles and applies them, draw conclusions. For instance if we accept the general proposition that man is entirely motivated by self-interest. In applying the deductive method of economic analysis, we proceed from general to particular.

STEPS OF DEDUCTIVE METHOD

The main steps involved in deductive logic are under:

i. Perception of the problem to be inquired into: In the process of deriving generalization, the analyst must have a clear and precise idea of the problem to be inquired into.

ii. Defining of terms: The next step in this direction is to define clearly the technical terms used analysis. Further, assumptions made for a theory should be precise.

iii. Deducing hypothesis from the assumptions: The third step is deriving generalizations is deducing hypothesis from the assumptions taken.

iv. Testing of Hypothesis: Before establishing laws or generalizations, hypothesis should be verified through statistical methods. ( Their inverse relationship between price and quantity demanded of a good is a well established generalizations.

MERITS OF DEDUCTIVE METHOD

The main merits of deductive method are as under:

i. This method is near to reality. It is less time consuming and less expensive.

ii. The use of mathematical techniques in deducing theories of economics brings exactness and clarity in economic analysis.

iii. There being limited scope of experimentation, the methods helps in deriving economic theories.

iv. The method is simple because it is analytical.

DEMERITS OF DEDUCTIVE METHOD

i. The deductive method is simple and precise only if the underlying assumptions are valid. More often the assumptions turn out to be based on half truths or have no relation to reality. The conclusions drawn from such assumptions will, therefore, be misleading.

ii. Professor Learner describes the deductive method as ‘armchair’ analysis. According to him, the premises from which inferences are drawn may not hold good at all times, and places. As such deductive reasoning is not applicable universally.

iii. The deductive method is highly abstract. It requires; a great deal of care to avoid bad logic or faulty economic reasoning.

As the deductive method employed by the classical and neo-classical economists led to many facile conclusions due to reliance on imperfect and incorrect assumptions, therefore, under the German Historical school of economists, a sharp reaction began against this method. They advocate a more realistic method for economic analysis known as inductive method.

2. INDUCTIVE METHOD OF ECONOMIC ANALYSIS

Inductive method which also called empirical method was adopted by the ” Historical school of Economists”. It involves the process of reasoning with particular facts to general principle.

This method derives economic generalization on the basis of i. Experimentation, ii. Observation and iv. Statistical methods.

For example, we observe 200 persons in the market, we find that nearly 195 persons buy from the cheapest shops, out of the 5 which remains, 4 persons buy local products, while the fifth is a fool. From this observation, we can easily draw conclusions that people like to buy from a cheaper shop unless they’re guided by patriotism or they are devoid of common Sense.

STEPS OF INDUCTIVE METHOD

The main steps involved in inductive method are:

1. Observation

2. Formation of hypothesis

3. Generalization

4. Verification.

MERITS OF INDUCTIVE METHOD

1. It is based on facts as such the method is realistic.

2. In order to test the economic principles, methods makes statistical techniques. The inductive method is, therefore, more reliable.

3. Inductive method is more dynamic. The changing economic phenomenon are analyzed and on the basis of collected data, conclusions and solutions are drawn from them.

4. Inductive method also helps in future investigations.

DEMERITS OF INDUCTIVE METHOD

1. If conclusions are drawn from insufficient data, the generalizations obtained may be faulty.

2. The collection of data itself is not an easy task. The sources and methods employed in the collection of data differ from investigator to investigator. The results, therefore, may differ even with the same problem.

3. The inductive method is time consuming and expensive.

Ind

Name: Odo Kosisochukwu Agatha

Faculty: physical science

Dept: pure & industrial chemistry

Reg: 2019/242722

Code: Eco 101

Email: kosisochukwuodo@yahoo.com

Level: 200

METHOD OF ECONOMICS ANALYSIS

1 INDUCTIVE METHOD

2. DEDUCTIVE METHOD

INDUCTIVE METHOD: This can also be called emperical method. It derives economic generalizations on the basis of experiment and observation. Detailed data are collected with regard to a certain economic phenomenon and is made to reach a certain generalization which follow from the observation collected. Experiment, observation and econometric methods can be use to derive economic principles.

DEDUCTIVE METHOD: This can also be called abstract, analytical and prior methods.

The principle steps in the process of economics generalization through deductive methods are:

i Perception of the problem to be inquired

ii Defining precisely the technical terms and making appropriate assumption

iii Deducing hypothesis that is deriving conclusion from the process of logical reasoning

iv Testing of hypothesis deduced

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MATRIC NUMBER: 2020/242585

DEPARTMENT: ECONOMICS

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METHODS OF ECONOMIC ANALYSIS:

They are divided into two. They are ;

1. Deductive Method

2. Inductive Method

1. DEDUCTIVE METHOD :

The deductive Method is based on an abstract approach to the derivation of economic generalizations and theories.

The steps involved in deriving these theories and generalizations include:

a) Perception of the problem: This entails conscious understanding of the problem under consideration.

b) Precisely defining the technical terms and making assumptions. These assumptions maybe behavioural (behaviour of economic variables) or technological (relating to the state of technology).

But these assumptions do not apply in some cases.

c) Deduction of hypothesis based on those assumptions made.

Hypothesis can be viewed as an assumption taken to be true for the purpose of further argument or investigation.

d) Testing and verifying these hypothesis:

The deducted hypothesis needs to be verified before they are established as generalizations or Economic principles. Testing of these hypothesis can also be in statistical form.

2. INDUCTIVE METHOD :

The inductive method uses econometric package in experimentations.

It derives Economic generalizations on the basis of experience and observations. It involves data collection with reference to a certain economic phenomenon. These data obtained can help in the establishment of economic principles and theories.

The three main ways of deriving these economic principles include:

a) Experimentation

b) Observation

c) Econometric / Statistical Method.

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Question : Discussion on the methods of Economic analysis

Answer:

Economic generalisations describe the laws or statements of tendencies in various branches of economics such as production, consumption, exchange and distribution of income.

The generalisations of economics like the laws of other sciences, state cause and effect relationship between variable and describe these economic hypotheses which have been found consistent with fact or, in other words, have been found to be true by empirical evidence. But a distinction maybe drawn between a generalisation and a theory.

The methods of economics analysis which have been broadly categorized are;

Deductive method

Inductive method

Deductive method:

The deductive method which is also known as the abstract, analytical or priori method represents an abstract approach to the derivation of economic generalisations and theories.

The principle steps in the process of deriving economic theory through deductive methods are:

A. A clear idea of the problem.

B. Defining precisely the technical terms and making appropriate assumptions often called postulates or premises.

C. Deducing hypotheses, that is deriving conclusions from the premises through the process of logical reasoning.

D. Testing of the hypotheses deduced. This is the final stage in the deductive method.

Inductive method:

This is also called “empirical method”. This method derives economic generalisations on the basis of experience and observations.

There are three ways which can be used for deriving economic principles and theories, which are

– Experimentation

– Observations

– Statistical or econometric method

Some of the recent researches in the field of macroeconomics such as the nature of consumption function describing the relation between income and consumption, the principle of acceleration describing the factors which determine investment in the economy have been obtained mainly through the use of inductive method. Moreover there is need to emphasize again that the use of induction or empirical method is not of much value if it is not supported by the economic hypothesis or theory developed by deductive logic. The inductive method can at best be used to empirically test the theory or hypothesis as to whether it is consistent with or refuted by facts. The inductive method has another limitation in that there is a great risk of conclusions being drawn from insufficient data. To obtain generalisations through inductive method one should take note that sufficient number of observations or data has been taken into account

Finally, the controversy which existed among the early economists as to whether deductive or inductive approach is more appropriate in developing economic theories and principles has been resolved. The modern viewpoint in this regard is that both are needed for the proper development of scientific economic theories. Indeed the two are complementary rather than competitive.

Name: Ogbu Emmanuel Azubuike

Department: Sociology and Anthropology

Reg number: 21649423GF

Economists have basic ways through which they analyse Economics, any economic analysis involves the formulation of laws and generalisation through two methods; Deductive and inductive method.

1. Deductive method : this is refered to as the prior reasoning. We start from practical assumptions and arrive at conclusions (hypothesis) using logical analysis or our own analytical abilities. This method has different stages which are the

* Observation of a task

* Making the hypothesis and;

*Testing the hypothesis using more observations.

When the hypothesis of this stage is verified it becomes an economic principle.

2. Inductive method: this method flows from facts to theory . First, information and facts are collected and then we move towards providing evidence using Economic theory and facts. This method formulates principles using sub method, observations, experimentation, statistical method.

Data is collected about a particular economic theory and then conclusions are drawn.

The stages are:

*Observation

* Formulation of hypothesis

* Generalising principles

* Verifying against actual facts.

Name: Ezemma Honest Chinaza

Department: combined social science (Economics/psychology)

Reg no:21536287CA

Methods of Economic Analysis

Like in any other science, Economics adopts two important methods in it’s investigations and formation of laws and principles. The two methods are:

1. Deductive method

2.inductive methods

1. Deductive method of Economic Analysis

This is alsoMethods of Economics Analysis called a priori reasoning. We start from unchallenged elementary or rudimentary assumptions/ facts and then arrive at conclusions(build a hypothesis or theory) using logical analysis or our own analytical abilities. In this kind of reasoning, we go from general to specific. The stages in deductive reasoning are:

Observation of a task/ issue

Making the hypothesis

Testing the hypothesis using more observations, etc.

2. Inductive method of Economics AnalysisThis type of reasoning flows from facts to theory. First, we collect information and facts and then move towards providing evidence using economic theory and facts. This method formulates principles using the sub-methods- Observations, Experimentations, Statistical methods.

This reasoning gives us a hypothesis and if this hypothesis gets verified we get general economic principles or laws. Inductive Method of Economic Analysis

Observation

Formulation of a hypothesis

Generalizing principles

Verifying against actual facts

Nnamdi Peace Munachukwumu

Nursing Sciences

20690492HA

2 Methods of Economic Analysis.

1. Deductive Method: This is also called Abstract Analytical and A Prior Method. It’s Derives Economic Generalization on the Basis of an “Abstract Approach”.

Principle Step in the Process of Deriving Economic Generalization through Deductive Logic are:

-Perception of the Problem to be enquired Into.

-Deducing Hypothesis , (Deriving Conclusions through the process of Logical Reasoning).

-Testing of Hypothesis deduced.

2. Inductive Method: This Method is also called “Empirical Method”. It derives Economic Generalization on the Basis of ”Experiment and Observation “.

This Method also involves the Collection of Detailed Data with regards to a certain Economic Phenomenon and Efforts are made to arrive to a Certain Generalization which will be Gotten from the Observations Collected.

~However, The number of Observation has to be large before it can yield valid Economic Generalization.

Principle steps in the Process if Deriving Economic Generalization through Inductive Logic:

-Experimentation

-Observation

-Statistical Econometric Method.

CHUKWUDI FAVOUR CHINECHEREM

DEPARTMENT: PHILOSOPHY

REG NO: 2020/243126

ECO 101

METHODS OF ECONOMICS ANALYSIS

Deductive method

Inductive method

DEDUCTIVE METHOD

This method can also be called a priori reasoning,in this method we starts from the fact then arrive to the conclusion, building a hypothesis or theory using logical or analytical approach or abilities. This method begins from the general to the specific ,it observes issues or task in this process making of hypothesis then testing the hypothesis using more observations. Stages in this include,

* Observation of a task/issues

* Making the hypothesis

* Testing the hypothesis

INDUCTIVE METHOD

This method deals with data collection about a particular economic theory and then conclusions are drawn .we collect information and facts and then move toward providing evidence using economic theory and facts, this method formulated principle’s using both experiment and observations. Stages in this method include;

* Observation

* formulation of hypothesis

* Logical reduction

* Test

* Predict agreement

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Department.. philosophy.

Reg no..20639794AF

E-mail.okaforjulet42@gmail.com.

METHOD OF ECONOMIC ANALYSIS.

(1). DEDUCTIVE METHOD.

This is a method of verifying existing knowledge which look deep into complex problem on the basis of generally accepted laws and basic assumption,it is also called abstract method which starts from a broad sense and narrows down to small point.

(2) INDUCTIVE METHOD

This is based on observation of fact as problem, then establish reasoning and solutions in the method, it is a method of discovering new knowledge, it is also called empirical method.inductive method uses econometric packages such as e-views ,stats etc in making generalization.

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Method of analysis involves the formulation of laws and generalization through two methods which are Deductive reasoning and Inductive reasoning

1) DEDUCTIVE REASONING : this starts from assumptions and then arrive at conclusions using simple logical analysis. It consist of four steps

a) perception of the problem

b) Definition of technical terms and making of

Assumptions: we define problem and explain

the technical steps then make assumptions

which are also called POSTULATES.

c) Deducing Hypothesis: an hypothesis is formed

based on the observation and assumptions

d) Testing or Verification of hypothesis: more

Observations and experiments are performed

Until the results prove the hypothesis, then it

Is verified and becomes a general economic

Principle or a law.

If the observation at the beginning is wrong or faculty, it would give wrong conclusions.

2) INDUCTIVE REASONING: this starts from the collection of information and facts(data) which has already been established and then move to provide evidence. It uses basic scientific methods, Statistical methods and Experiments to interpret the data and arrive at better logical conclusions. Based on the conclusions, you can now put ADVICE. It is more reliable because the data is a general fact.

If the data is faulty, or a mistake is made during the experiment, the conclusion would be faulty.

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There are two most important methods of analysis used by economists.They include:

1.Deductive method

2.Inductive method

1.Deductive method:This is also called abstract,analytical priority method and represents an abstract approach to the derivation of economic generalizations and theories.A law of generalizations describe relationship between variables ,it does not provide any explanation of the described relation.

The principal steps in the process of deriving economic generalizations through deductive logic are:

*Perception of the problem to be enquired

*Defining precisely the technical terms and making assumptions

*Deducing hypothesis

*Testing of hypothesis deduced

Merits of deductive method

*Useful mathematical techniques can be employed to derive laws and theories of economics

*Deductive methods does not require detailed collection of data unlike inductive methods

*It is less time consuming and less expensive

*Shortcomings of deductive analysis may not be overlooked

Demerits of deductive analysis

*It may not have any operational significance based on highly unrealistic assumptions

2.Inductive method:Inductive methods is also called empiral method.In this method detailed data are required and collected with a regard of a certain economic phenomenon which is made to arrive at certain generalizations which follow from the observation collected

The three ways used are:

*Experimentation

*Observation

*Statistical or econometric method

Merits of inductive analysis

*It is highly practical and realistic

*They are not universal but valid under various efforts

*It’s helpful in varying conclusions

Demerits of inductive analysis

*It is not of much value if it’s not supported by the economic hypothesis or theory developed for deductive logic.

*There is a great risk of conclusion being drawn from insufficient data

*One must make sure they take care of sufficient number of observation or data been taken into account.

*Collection of data is not an easy task

A researcher using inductive method must know how to process and interpret data

*Compared to deductive method ,inductive method is time consuming and expensive.

Conclusions:Distinguishing the two methods if predictions are found to be real with facts ,the theory but if the predictions are found inconsistent with facts ,it is rejected.

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There are two basic methods of analysis

1. Deductive method: This is the first method of economic analysis and it’s method represent an abstract approach to the derivation of economic generalization. There are four steps of deriving this generalization.

_Perceiving the problem: The analyst must know the root of the problem to be enquired into.

_Making of assumptions: After perceiving the problem the analyst will go into the next stage by making some observation about the problem which can be behavioural or technological pertaining on the technological state of the factor.

_Drawimg hypothesis from assumptions taken: This process may be carried out verbally or may be conducted using symbolic logic.

_Testing the hypothesis: For the hypothesis to be verified one will need to back those thesis with proofs.

2. Inductive method: This derives economic generalization on the basis of experience and observation. This method of observation should not be verified on the basis of few but large observations.

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There are two basic methods of economics analysis

1. DEDUCTIVE METHOD

2. INDUCTIVE METHOD

DEDUCTIVE METHOD

Deductive method is known as the analytical abstract a priori method. Here we start with certain formal data and assumptions. Then by logical reasoning we arrive at certain conclusions. We start with undisputed fundamental facts and after adding some assumptions we build up a theory. In Deductive method of Economic Analysis we proceed from the general to the particular. This is also known as an hypothetical method for some of the assumptions may not correspond to actual facts, but very near actual facts which may be used as premise for starting, reasoning and drawing conclusions. Deductive reasoning provides us with hypotheses or generalizations. If the hypotheses are tested and verified with relevance to facts, we have valid economic laws.

INDUCTIVE METHOD

In this method, economists proceed from a practical angle to problems of science to reduce the gulf between theory and practice. Induction is done by two forms, viz. experimentation and statistical form. Facts are collected first, arranged and conclusions are drawn. Then these general conclusions are further verified with reference to actual facts.The inductive method is generally associated with the statistical form of inductions. The statistical approach has a larger field in economic investigations than the method of experimentation. Further, the method of statistical induction is indispensable for the formulation of economic policy.

Economic analysis in most cases involves the formulation of laws and this can be achieved by these methods – Deductive and Inductive method.

DEDUCTIVE REASONING also known as priori reasoning, involves the observation of issues, making and testing hypothesis using more observation and if generally accepted becomes an Economic law. This method is simple as only simple deduction is needed and boosts economic reasoning. Sometimes wrong hypothesis made may result to wrong conclusion.

In INDUCTIVE REASONING, facts, information and theories are gathered and tested on through thorough observation and experiment and obtained result may or may not be verified. This method is more reliable since it is based on facts and statistical methods are used in this approach. It is time consuming and expensive and can be affected by limited data sources.

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There are basically four(4) methods of economic analysis.

INDUCTION METHOD:

This involves the use of particular fact or example to form a general rule and principles. Here, the economist starts with observations and them analysis it data before drawing conclusions from them.

DEDUCTION METHOD:

It is the use of knowledge that are generally true in order to understand particular situations or problems. Under this method the economist base their research on an existing theory. Here, the economist start by setting accepted principles( I.e a theory that is generally know and accepted) and draw interference from them.

Example:

An increase in the price of rice can be used to estimate inflation rate.

POSITIVE STATEMENTS:

They are statements about “what is”. In other words, they are factual statements. This tries to point out the good or bad decisions in the society.

Example:

Tax increase or increase in school fees will reduce household disposable income.

NORMENTIVE STATEMENTS: They are statements that depends on value judgement (ie issues of personal opinion which may or may not be fact).

Example:

Tax reduction will increase household standard of living.

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There are two major methods used by economists in analysing Economic situations, they include:

1. The Deductive Method of Economic Analysis

Deductive method is known as the analytical, abstract or priori method. It starts with certain formal data and assumptions. Then by logical reasoning certain conclusions are made. It is with these undisputed fundamental facts and after adding some assumptions that theories are arrived at. For instance, it is assumed that businessmen aim at achieving maximum profit. It follows from this that businessmen buy the materials at the cheapest market and sell it in the most costly market.

In Deductive method of Economic Analysis we proceed from the general to the particular. This is also known as a hypothetical method because some of the assumptions may not correspond with actual facts, but very near actual facts are to be used as a premise for starting, reasoning and drawing conclusions.

A complete form of deductive method consists of three stages,

i. Observation ot perception of the problem;

ii. Making assumptions from logical reasoning

iii. Formulation of hypothesis, and

iv. Testing the hypothesis

Deductive reasoning provides us with hypotheses or generalizations. If the hypotheses are tested and verified with relevance to facts, they become valid economic laws.

Advantages of Deductive Method of Economic Analysis

1. Deductive method is exceedingly simple.

2. Deductive method obviates the necessity of experimentation. Economics being a social science, experimentation may not be available as in the case of physics or chemistry. So, the next best alternative to experiment is deductive reasoning.

3. The deductive method results in accuracy and exactness in generalization, because of logical reasoning. This method gives a high standard of precision in abstract economic reasoning.

Disadvantages of Deductive Method of Economic Analysis

Deductive method has its drawbacks also:

1. Deduction is based mainly on assumptions which are perfectly valid but If assumptions are wrong, generalizations made on the basis of wrong assumptions will be imperfect and invalid.

2. In deduction there is too much of abstraction and economists by means of their intellectual exercises produce only “intellectual toys” which have little connection with reality.

3. Deductive generalizations started on wrong premises will be dangerous when such generalization claim universal validity. For instance, if such faulty generalizations are made use of in framing government policies, the results would be nothing but disastrous.

2. The Inductive Method of Economic Analysis

In this method, economists proceed from a practical angle to problems of science to reduce the gap between theory and practice. Induction is done by two forms, viz. experimentation and statistical form. Facts are collected first, then arranged and conclusions are drawn. Then these general conclusions are further verified with reference to actual facts.

The inductive method is generally associated with the statistical form of inductions. The statistical approach has a larger field in economic investigations than the method of experimentation. Further, the method of statistical induction is indispensable for the formulation of economic policy. Practically, Malthus presented his famous theory of population only after studying the facts of population in various countries; He then used statistics to support his theory. .

Advantages of Inductive Method of Economic Analysis

Inductive method has the following merits:

1. It is highly practical and realistic as it describes things as they are.

2. It is helpful in verifying the conclusions of the deductive method.

Disadvantages of Inductive Method of Economic Analysis

Inductive method has the following limitations:

1. When the investigators lack a balanced judgement there is the risk of drawing hurried conclusions based on inadequate information or data.

2. Collection of data in the inductive process is highly complex and time consuming.

3. Only induction alone will not deliver unless it is complemented by means of deductive reasoning. Without deduction, the inductive method would result in producing only a mass of unrelated and unconnected facts.

In conclusion, the two methods have to be made use of or combined to achieve the required objective. The two methods, deductive and inductive, are not competitive, but complementary in helping the investigator arrive at an accurate conclusion.

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1)Deductive Method:This is called prior reasoning , we start from unchallenged elementary or rudimentary assumptions of fact and then arrive at a conclusion ( to build a hypothesis or theories) using logical analysis or our analytical abilities. In this kind of reasoning will go from general to specific.

The stages in in Deductive Method are

Observation of task or issue

Making the hypothesis

Testing the hypothesis using more observation

this reasoning gives us a hypothesis and if this hypothesis get verified we get general economics principle or law.

2) Inductive Method:this type of reasoning flows from facts to theory

First we collect data and facts and then we move towards providing evidence using economic theories and fact, this method formulate principles using the sub method, observations ,experimentation ,and statistical method

Data is collected about a particular economic theory then are conclusion drawn.

The stages in this method are

Observations

Formulation of hypothesis

Generalizing principles

Verfying against actual facts

Note: inductive is more realistic and reliable

DEDUCTIVE INDUCTIVE

Information Theory

Pattern Hypothesis

Tentative hypothesis Observation

Theory Confirmation

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Department.Nursing science.

METHOD OF ECONOMIC ANALYSIS.

Just like every other science Economic adopts it own two important method in investigation and formulation of law and principle.

The two methods are

Deductive method

Inductive method

Deductive method- In this method we start with certain formal data and assumption.Then by logical reasoning we arrive at certain conclusion.it is also known as the ANALYSTICAL ABSTRACT A PRIOY METHOD.we start with disruptey fundamental facts and after adding some assumpy we build up a theory.In deductive method of economic Analysis we proceed from general to the particular.

This also known as a HYPOTHETICAL METHOD.

In economics we start with a very simple premises and work up gradually or more and more complex hypothesis.

Deductive method consist of three stage.

Observation

Deductive reasoning

Instance and testi by means of further observation.

INDUCTIVE METHOD OF ECONOMIC ANALYSIS

This is another form or method of economic Analysis.

This inductive method is generally associated with the statistical form of induction.

In this method, economic proceed from practical angle to problem of science to reduce the gulf between theory and practice.

The statistical approach has a larger field in economics investigation than the method experiement .

Induction is done by two forms

Experiementation form

Statistical form.

Facto are collected first arranged and conclusion drawn.

Then these general conclusion are further verified with reference to actual facts

Stages of inductive reasoning.

Observation

Formulation of hypothesis

Generalization principle

Verifying against actual facts

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What are the basic methods of analysis used by economist? Briefly and convincingly discuss each of them.

ANSWER

The basics methods of analysis used by Economists are:

1) DEDUCTIVE METHOD

2) INDUCTIVE METHOD

DEDUCTIVE METHOD

The Deductive method is also called “analytical method or prior method”. The Deductive method consists in deriving conclusions from general truths, takes few general principles and applies them to draw conclusion.

STEPS IN THE PROCESS OF DERIVING ECONOMIC GENERALIZATIONS THROUGH DEDUCTIVE LOGIC ARE:

a) PERCEPTION OF THE PROBLEM

The problem which an investigator selects for enquiry must be stated clearly. Maybe very wide like poverty, unemployment, inflation etc or narrow relating to an industry. The narrow the problem the better it would be to conduct the enquiry.

b) FORMULATING OF ASSUMPTIONS

The next step in deductive is the framing of assumptions which are basis of hypothesis. To be fruitful for enquiry, the assumption must be general. In any economic enquiry, more than one set of assumptions should be made in terms of which a Hypothesis may be formulated.

c) FORMULATING HYPOTHESIS

The next y is to formulate a hypothesis on the basis of logical reasoning where by conclusions are drawn from propositions.

d) TESTING AND VERIFYING THE HYPOTHESIS

The final step in the Deductive method is to test and verify the hypothesis. For this purpose, economist now use statistical and econometric methods. A hypothesis is true or not can be verified by observation and experiment.

MERITS OF DEDUCTIVE METHOD

1) REAL: This method is near to reality. It is less time consuming and less expensive.

2) EXACT: The use of mathematical techniques in deducing theories of economics brings exactness and clarity in economic analysis.

3) UNIVERSAL: The Deductive method helps in drawing inferences which are universal validity because they are based on general principles such as law of diminishing returns.

DEMERITS OF DEDUCTIVE METHOD

i) Deductive method is based mainly on assumptions which are perfectly valid. If assumptions are wrong, generalizations made on the basis of wrong assumptions will be imperfect and invalid.

ii) In deductive there is too much of abstraction and economist by means of their intellectual exercises produce only “intellectual toys” having little connection with reality.

2) INDUCTIVE METHOD

Inductive method which is also called “empirical method” derives economic generalizations on the basis of experience and observation.

STEPS IN THE PROCESS OF DERIVING ECONOMIC GENERALIZATIONS THROUGH INDUCTIVE LOGIC ARE:

a) THE PROBLEM

In order to arrive at a generalisation concerning an Economic phenomenon, the problem should be properly selected and clearly stated.

b) DATAThe second step is the collection, enumeration, classification and analysis of data by using appropriate statistical techniques.

c) OBSERVATIONS

Data are used to make observations about facts concerning the problem.

d) GENERALISATIONOn the basis of observation, generalisation is logically derived which establishes a general truth from particular facts.

Thus, inductive is the process in which we arrive at a generalisation on the basis of particular observed facts.

MERITS OF INDUCTIVE METHOD

i) It is highly practical and realistic as it descry things as they are.

ii) It is helpful in verifying the conclusions of the Deductive method.

iii) Economic laws under this method are not universal but valid only certain conditions.

DEMERITS OF INDUCTIVE METHOD

i) Costly method: The Inductive y is not only time-consuming but also costly. It involves detailed and painstaking process of collection, classification, analyses and interpretation of data.

ii) Difficult to prove Hypothesis: Again, the use of statistics in inductive cannot prove Hypothesis. It can only show that the hypothesis is not inconsistent with the known facts.

CONCLUSION

The above analysis reveals that independently neither deductive not Inductive method is helpful in scientific enquiry; in reality, both deductive and inductive are related to each other because of some facts.

Name: Ayogu Timothy peace. Reg no:2020/241317. Department:philosophy. 1, Deductive method is also called a priori reasoning, we begin from unchallenged elementary or rudimentary assumption, facts and then arrive at conclusion (build a hypothesis or theory) using logical analysis or our own analytical skills *observation of task issue. *Making the hypothesis. *Testing the hypothesis using more observation etc.. 2, Inductive method flow from fact theory first,we collect facts and informations then move towards providing evidence using economic theory facts. *Observation. *Formulation of hypothesis. *Generalizing principles. *Verifying against actual facts.

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Assignment on Eco 101

What are the basic methods of analysis used by economists briefly and convincingly discuss each of them.we have two methods of Economic analysis they are no1 deductive method and no2 is inductive method.

Deductive method: we shall first explain the deductive method of deriving economic generalisations.THe deductive method is also called abstract analytical and a priori method and represents an abstract approach to the derivation of Economic generalisations and theories.the principal steps in the process of deriving economic generalisations through deductive logic are

(a) perception of the problem to be enquired into

(b). Defining precisely the technical terms and making appropriate assumptions often called postulates or premises

Advertisement:(c) Deducing hypotheses, that is, deriving conclusions from the premises through the process of logical reasoning and (d) testing of hypothesis deduced

(a) perception of the problem:in any scientific enquiry the analyst or theorist must have a clear idea of the problem to be enquired into (b) definition of technical terms and making of Assumptions:as mentioned above assumptions may be Behavioural pertaining to the behaviour of the economic variable or they may be technological and the factor endowments the crucial assumptions are made in the basis of observation or introspection.(c) Deducing hypothesis through logical deduction: the next step in deriving generalisations through deductive, logic is Deducing hypotheses from the assumptions or premises taken

(2) inductive method: the inductive method which is also called empirical method derives economic generalisations on the basis of experience and observations.in this method detailed data are collected with regards to a certain economic phenomenon and effort is then made to arrive at certain generalisations which follow from the observations collected.but ,it is worth mentioning that the number of observations has to be large if it can yield a valid economic generalisation.one should not generalise on the basis of a very few observations, there are three ways which can be used for deriving economic principles and theories they are

(a) Experimentation

(b) observations.

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THE METHODS OF ECONOMIC ANALYSIS

They are the Deductive and Inductive methods

DEDUCTIVE METHOD: Is also known as the Analytical, Abstract or Priori method. The method consist in driving conclusions from general truths, takes few general principles and applies conclusions.

For instance if we accepts the general proposition that Manis entirely motivated by self_interest . In applying the deductive method of economic analysis we proceed from general to particular.

In dudective method of economic analysis we proceed from general to the particular. This is also known as Hypothetical method, for some of the assumptions may not correspond to be used as premises to starting, reasoning and drawing conclusions.

STEPS OF DEDUCTIVE METHOD

I, Perception of the problem to be inquired into_In the process of driving economic generalizations, the analysis must have a clear and precise idea of the problem to be inquired into.

ii, Deducing hypothesis from the assumptions

III, Definition of terms

2 INDUCTIVE METHOD OF ECONOMIC ANALYSIS : It is also called Empirical method was adopted by the “Historical school of economist; it involves the process of reasoning from particular facts to general principles.

This method derives economic generalizations on the basis of

I, Experimentations

ii, Observations and Statistical methods.

STEPS OF INDUCTIVE METHOD

I It based on facts as such the method is realistic

ii, Inorder to test economic principles, method makes statistical techniques, the inductive method is therefore reliable.

III, It is dynamic

iv, Inductive method also helps in future investigation

Deductive method and Inductive methods are both needed for scientific thought, as the right and left foot are both needed for walking.

Economics as a social science has its way of conducting an investigation before the formation of law. They’re the deductive and inductive methods.

1. The deductive method.

The deductive method mostly lies on assumption. It is based on gathered facts and observations from which a conclusion is then derived through logical reasoning. For example, it is noted that prices would increase when demand is high which means that a sudden large inflow of money will increase the amount of consumers in the market which increases demand thereby causing inflation. That is observation and deduction. Although not all deductions might be true as they are considered hypothetical until they’re effectively proven. The deductive method of analysis consists of 3 stages.

a) Observation: At this stage, studies are carried out and market trends and changes are being observed in a given period of time. It is from these observations and research that certain deductions are made.

b) Deductive reasoning: After an observation is made, a deduction is made through logical reasoning.

c) Testing of hypothesis’ model: Not all deductions are true, so they have to be tested both theoretically and practically before they are seen as a fact.

Advantages of deductive reasoning

1. It an easier and a less complicated form of analysis.

2. It is an analysis dispensable of experiments as most of its processes are done intellectually.

3. Due to the use of logic, it gives accurate and reliable results.

Disadvantages of deductive reasoning

1. Deductions made might not be realistic since practical engagements are less.

2. They’re based on assumptions and observations which if wrong, makes the deduction invalid.

3. Deductions might not be generalized since environmental differences might be a barrier for its universal accuracy.

2. Inductive Method

This method involves practical methods of experimentation to approach problems. Facts are gathered through surveys and stats which are then arranged to come up with conclusions that are further verified. For example, after conducting a research on employees from different locations and discover that 85% spend most of their incomes on shoes, it can be concluded that shoes are the most bought thing by salary earners. The Inductive method for conclusion is not based on any assumptions but from statiscal evidences which facts are being drawn from to be verified further.

Advantages of the inductive method

1. It lies on established facts, making conclusion’s accuracy not dependable on source.

2. It is future oriented. This means that information gotten can be used for future predictions.

3. It seems to be more realistic when compared to the deductive method.

Disadvantages of the inductive method

1. Due to this method being largely based on statiscal data, informations can be miss-interpreted and mis-used.

2. Approach of experiments might be different with different investigators, resulting to varying results.

3. It involves time and money.

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A DISCUSSION ON THE BASIC METHODS OF ANALYSIS USED BY ECONOMISTS

Economic generalization describe laws that govern the relationship between human behaviour and their location of scarce resources between alternative ends.

Like other science laws, generalization of economic state cause and effect relationship between variables and describe economic hypothesis which have been proven true by a empirical evidence. Before approving a state a generalization true, steps of processes of logical reasonings and explanations on the stated variables will be carried out. The 2 methods I’ll discuss is :

(a) THE DEDUCTIVE METHOD: This represents an abstract method in approaching generalization theories. the various steps in reaching a conclusion include:

(i) Perception of a problem: The economist must understand the problem he is peering into as well as the variables he will consider and people he will interrogate.

(ii) Defining Technical Terms: The economist must make use of clear terms used in the analysis as well as keeping tabs and records on the assumptions made.

(iii) Deducing Hypothesis: A hypothesis describes relationship between factors affecting a phenomenon; it establishes the cause and effect relationship between the variables having a bearing on the phenomenon. Through logical process, a hypothesis is drawn from the assumptions made.

(iv) Verification of the hypothesis: Unlike science, economists cannot make controlled experiments and must reply on observations and statistics, so testing and re-testing a given hypothesis must be carried out before a generalization law is made.

ADVANTAGES OF THE DEDUCTIVE METHOD

1. Useful mathematical techniques can be employed to derive laws and theories of economics.

2. The use of complex mathematical methods in the deductive approach enables the economists to introduce accuracy in their economic principles and theories.

DISADVANTAGES OF THE DEDUCTIVE METHOD

1. It requires the high level of competence and logic.

2 It depends too much on assumptions.

(b) THE INDUCTIVE METHOD: This is also called the empirical method which is arrived at from observations and experiences. Here, detailed data are collected with regard to a certain economic phenomenon and effort is then made to arrive at certain generalisations which follow from the observations collected.

the steps in arriving at a generalization from this method is much similar to that of the deductive method but at the third step;