Question

Write notes on

Scope of statistics in economics.

Answer 1

Statistics is an indispensable tool for the understanding of various economic problems and in the functioning of an economy. The following points highlight the scope of statistics in economics.
1. Assessing the performance of an economy: Statistics provides the basis for analysing the performance of an economy and comparing it with other economies. For example, data on national income for different years can be used to assess the economic performance of the concerned economy over a period of time.
2. Analysing economic problems: The magnitude of economic problems such as unemployment, poverty, illiteracy and population can be judged with the help of statistical data.
3. Analysing the relationship between economic variables: Relationship between two or more economic variables can be assessed with the help of statistical data which helps in establishing a cause and effect relationship.
4. Base for economic theories and models: No economic theory or model can be constructed without relevant statistical experiments.
5. Formulation of policies: Statistics helps the government and the policy makers in formulating various policies for economic development. For example, policies on poverty and unemployment are based on relevant statistical data.
6. Facilitates research: Statistical data forms the base for research and studies. Various statistical tools and techniques are employed in research and studies such as analysing the effect of one variable on another.
7. Forecasting: Economic forecasting such as price trends and market situations have statistics as the base. It is on the basis of appropriate statistical data that suitable future plans and policies can be formulated.