What Is an Economic Theory

the ideas and priniciples that aim to describe how economies work: … a particular idea or principle that aims to describe how an economy works: He disagreed with supply-side economic theories.

What is an example of economic theory?

Supply and demand is a theory in microeconomics that offers an economic model for price determination. … For example, as the supply of a good or service decreases and consumer demand persists, the price of it may skyrocket—in this case, the demand is greater than the supply.

What are types of economic theory?

Economic theories broadly fall under two categories: microeconomics and macroeconomics. … Macroeconomics, on the other hand, studies the behavior of the overall economy (e.g., the U.S. economy as a whole), although it sometimes also looks at economies of different regions that comprise the overall economy.