1.

Write the importance of statistics in economics?

Answer» \tQuantitative expression of economic problems:\xa0Statistics is an essential tool for an economist to understand the problems of an economy through quantitative data. Example: The problem of poverty in India can be quantitatively expressed as there is a substantial decline in poverty ratios in India from 55% in 1973to 36% in1993.\tInter-sectoral and inter-temporal comparisons:\xa0This quantitative data is further used to make inter-sectoral comparison ,i.e. across different sectors of the economy and inter-temporal comparisons ,i.e. over different plan periods of the rural and urban unemployment.\tCause and effect relationship:\xa0Different sets of data are used to find the cause and effect relationship. This enables policy makers to formulate policy to solve the problem of an economy.\tEconomic equilibrium:\xa0Statistical data helps economists to understand the behaviour of the producer and consumer in the market. Example: How the producer choose sthe combination of inputs to produce the goods to maximise their profit.\tDeveloping economic theories:\xa0This also facilitates economists to develop theories as how the prices of goods vary in relation to the demand for the product.\tForecasting:\xa0Statistical data are useful to forecast the changes in the factors which influence other factors. This information enables economists to formulate polices and suggestions to overcome the problem.\tFormulation of policies:\xa0Statistical data is essential for formulating policies of economic development. Example: If the government wants to formulate or modify labour laws, then it will require statistical data on working conditions, number of working hours and minimum wages received by workers.


Discussion

No Comment Found

Related InterviewSolutions