ABSTRACT
This chapter discusses the uses of theory, other kinds of knowledge which are apparently used in analysing and discussing real economic problems, and discusses teaching. The general models serve the simple purpose of demonstrating the interconnectedness of all economic phenomena and shows how under certain conditions price may act as a guiding link between them. Economic statistics sometimes play a role in economic policy which is different from that which chapter discusses and although not directly related to the central theme. The chapter describes that there are also great controversies about the clash between domestic and foreign trade policies, about the risks that must be run in having unemployment, about the advantages or disadvantages of a rising price level, and the effect of these on the level of economic activity and the rate of economic progress. A good deal of applied economics in banking, finance, industrial relations and industrial organization is descriptive of institutions and how they work.
