Principles of Economics and the Data of Macroeconomics

 How economists are both scientists and policymakers and what principles does society use to allocate its scarce resources Economists are scientist because they development models and hypotheses that can be tested by using data. The models result in predictions, and sometimes these are off the mark, remember, when humans predict, God smiles. Data allow economist to describe what people actual do, this is called positive economics, for examples, by how much does gasoline consumption change if the gas tax is changed? Economists also recommend what ought to be done, called normative economics. For example, should the gas tax be changed? What are the effects of legalizing abortion (positive)? Should abortion be legalized (normative)? Perhaps one of the major contributions of economists is that they contributive to identifying winners and losers from public policy changes, think increasing the minimum wage, and private market changes, think the sale of Budweiser to a foreign company. Private markets are economic institutions that allocate scare resources through the price system. The rule of law to protect property rights ( I sell my labor, get paid, and buy a flatscreen tv, it's my tv that's what gives me the incentive to work) and enforce contracts is essential for a well-oiled market. Political institutions can wreck havoc on markets, think North Korea and Venezuela, or improve markets, think the federal clean air and water acts. The economic way of thinking allows one to identify winners and loses when resources are reallocated. It is almost never the case ...

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