Economic theories are structured sets of concepts that explain and predict relationships among economic variables, divided into micro and macro categories. Microeconomic theories focus on individual variables, while macroeconomic theories examine aggregate variables. These theories are simplified representations of real situations, subject to revision and verification through testing.

2. Theory
 Theories are sets of concepts and
generalizations so arranged to
explain and predict possible
relationship among phenomena.
 A theory is a simplified
representation of how two or more
variables interact with each other
 simplify it down to its essentials.
 A theory or model may be expressed in
words, charts, diagrams or in
mathematical form

4.  According to Kindleberger, “An economic
theory is a statement of relationship
among economic variables.
 It is a simplified representation of a real
situation.
 Economic theories are broadly divided
into two groups- Micro and Macro
economic theories.
 A micro economic theory explains the
relationship between two individual
variables.
 A macro economic theory expresses the
relationship between two aggregate
variables

5. The construction of an economic theory
is just like the step by step construction
of a building.
Generalization form the hypothesis
Testing and verification

6. Characteristics of Economic
theories
An economic theory explain
economic situation.
Economic theories, though
scientific in character, are
being revised and sometimes
refuted.
Statistically hypothetical

7. THANK YOU