Explore the difference between static economics and dynamic economics to understand their unique perspectives on economic systems.
10 Difference Between Static Economics and Dynamic Economics.
An Static Economics is a position in with the model as a whole remains unchanged, although, the individual variables may be observing a change. According to dark, a static state is characterized by the absence of five kinds of change, the six of the population, the supply of capital, the methods of production, the forms of business organization and the wants of the people but all the same the economy continues to work at a steady pace.
A common example of economic statics is the ordinary theory of demand and supply in which the analysist is concerned only in finding the combination of price and quantity consistent with the presupposed equilibrium condition. In short, economic static gives only a “Still picture” of the economy, a vision of the moment, disappearing as soon as it makes its appearance.
Dynamic Economics.
In economics, the term dynamic refers to the study of economic change In dynamic analysis the variables are included with the involvement of time i.e. how, what happens to a variable in one period, is related to what happened in preceding periods and to what is expected to happen in succeeding periods In dynamic models the values of the variables depend on the values of the other variables or upon their own values in the preceding periods.
For instance the values of consumption in the present period may depend on the value of income received in the preceding period and the value of consumption expenditures in the previous period. By dating the variables in dynamic analysis, we can investigate such changes as to how the plans of the businessmen to purchase for inventory, in a certain period of time is affected by their sales volume in the previous period or by the change in their sales between two successive periods in the past. Concluding, we can say that in dynamic analysis, the variables are analyzed with reference to time.
Statics And Dynamics Compared:
Comparasion between statics and dynamics is i given in the following:
Static analysis enjoys the virtue of simplicity whereas the dynamic analysis is complex one.
Static analysis is free of time variable, whereas time element is the basic ingredient of dynamic analysis.
Static analysis provides basis for dynamic analysis.
Static analysis is abstraction of reality, while dynamic analysis is a better representation of reality.
For some purposes, static analysis can do well and dynamic the static analysis fails to perform well and the only choice at the analysis the dynamic.
Static and dynamic analysis are not substitutes, rather they bear complementarity relationship.