Scribd
Upload
74 views3 pages

What Is Economics

Economics is the study of how individuals, businesses, governments and nations allocate scarce resources for production, distribution and consumption. It can be broken down into microeconomics, which focuses on individual agents, and macroeconomics, which examines overall economies. Modern Western economics began with Adam Smith's 1776 book "An Inquiry into the Nature and Causes of the Wealth of Nations". Economics studies how resources are allocated most efficiently through concepts like supply and demand.

Uploaded by

Kyle Castil
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
74 views3 pages

What Is Economics

Economics is the study of how individuals, businesses, governments and nations allocate scarce resources for production, distribution and consumption. It can be broken down into microeconomics, which focuses on individual agents, and macroeconomics, which examines overall economies. Modern Western economics began with Adam Smith's 1776 book "An Inquiry into the Nature and Causes of the Wealth of Nations". Economics studies how resources are allocated most efficiently through concepts like supply and demand.

Uploaded by

Kyle Castil
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

What Is Economics?

Economics is a social science concerned with the production, distribution, and


consumption of goods and services. It studies how individuals, businesses,
governments, and nations make choices about how to allocate resources.

Economics can generally be broken down into macroeconomics, which


concentrates on the behavior of the economy as a whole, and microeconomics,
which focuses on individual people and businesses.

KEY TAKEAWAYS

 Economics is the study of how people allocate scarce resources for


production, distribution, and consumption, both individually and
collectively.
 Two major types of economics are microeconomics, which focuses on the
behavior of individual consumers and producers, and macroeconomics,
which examine overall economies on a regional, national, or international
scale.
 Economics is especially concerned with efficiency in production and
exchange and uses models and assumptions to understand how to create
incentives and policies that will maximize efficiency.
 Economists formulate and publish numerous economic indicators, such as
gross domestic product (GDP) and the Consumer Price Index (CPI).
 Capitalism, socialism, and communism are types of economic systems.
Understanding Economics
One of the earliest recorded economic thinkers was the 8th-century B.C. Greek
farmer/poet Hesiod, who wrote that labor, materials, and time needed to be
allocated efficiently to overcome scarcity. But the founding of modern Western
economics occurred much later, generally credited to the publication of Scottish
philosopher Adam Smith's 1776 book, An Inquiry Into the Nature and Causes of
the Wealth of Nations.1

The principle (and problem) of economics is that human beings have unlimited
wants and occupy a world of limited means. For this reason, the concepts
of efficiency and productivity are held paramount by economists. Increased
productivity and a more efficient use of resources, they argue, could lead to a
higher standard of living.

Despite this view, economics has been pejoratively known as the "dismal
science," a term coined by Scottish historian Thomas Carlyle in 1849.2 He used it
to criticize the liberal views on race and social equality of contemporary
economists like John Stuart Mill, though some sources suggest Carlyle was
actually describing the gloomy predictions by Thomas Robert Malthus that
population growth would always outstrip the food supply.

Types of Economics
The study of economics is generally broken down into two disciplines.

 Microeconomics focuses on how individual consumers and firm make


decisions; these individuals can be a single person, a household, a
business/organization or a government agency. Analyzing certain aspects
of human behavior, microeconomics tries to explain they respond to
changes in price and why they demand what they do at particular price
levels. Microeconomics tries to explain how and why different goods are
valued differently, how individuals make financial decisions, and how
individuals best trade, coordinate and cooperate with one another.
Microeconomics' topics range from the dynamics of supply and demand to
the efficiency and costs associated with producing goods and services;
they also include how labor is divided and allocated, uncertainty, risk, and
strategic game theory.
 Macroeconomics studies an overall economy on both a national and
international level. Its focus can include a distinct geographical region, a
country, a continent, or even the whole world. Topics studied include
foreign trade, government fiscal and monetary policy, unemployment rates,
the level of inflation and interest rates, the growth of total production output
as reflected by changes in the Gross Domestic Product (GDP),
and business cycles that result in expansions, booms, recessions, and
depressions. 

Micro- and macroeconomics are intertwined; as economists gain an


understanding of certain phenomena, they can help us make more informed
decisions when allocating resources. Many believe that microeconomics'
foundations of individuals and firms acting in aggregate constitute
macroeconomic phenomena.

Schools of Economic Theory


There are also schools of economic thought. Two of the most common
are monetarist and Keynesian. Monetarists have generally favorable views on
free markets as the best way to allocate resources and argue that stable
monetary policy is the best course for managing the economy. In contrast, the
Keynesian approach believes that markets often don’t work well at allocating
resources on their own and favors fiscal policy by an activist government in order
to manage irrational market swings and recessions.
Economic analysis often progresses through deductive processes, including
mathematical logic, where the implications of specific human activities are
considered in a "means-ends" framework. Some branches of economic thought
emphasize empiricism, rather than formal logic—specifically, macroeconomics
or Marshallian microeconomics, which attempt to use the procedural
observations and falsifiable tests associated with the natural sciences.

Since true experiments cannot be created in economics, empirical economists


rely on simplifying assumptions and retroactive data analysis. However, some
economists argue economics is not well suited to empirical testing, and that such
methods often generate incorrect or inconsistent answers.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy