Among other sciences, economics is related to mathematics and statistics. Statistics is the science of averages. It is the science of counting. Many tables and diagrams used in economics are based on statistical analysis. Mathematical methods are largely used in modern economics.
Now we have a new science called econometrics. It makes use of statistics and mathematics in economics. The econometric society was founded in 1930, and the first Nobel prize in economics was awarded to Jan Tinberen and Ragnar Frisch for their contribution to econometrics.
Time element is very useful in studying the working of an economy. There are two main lines of approach. They are 1. static analysis and 2. dynamic analysis. In the case of static analysis, we examine a problem at any given moment of time. Even in static analysis, sometimes we consider a short period rather than a single point. We assume that some changes take place during the short period. The method of approach where we take note of changes in the short period is known as comparative statics. For example, in comparative statics, we compare the state of economy at one moment to the state of the economy at another moment. Marshall's analysis of supply and demand is a good example of comparative statics.
In dynamic analysis, we examine the path or process by which the economy moves from one state of equilibrium to another. Time element is an important factor is dynamic analysis. Change is the key word in dynamic analysis. For example, investment during a period may depend upon the rate of interest in the previous period. The study of the trade cycle may be given as a good example of dynamic analysis.