Economics is one of the branches of social science that is much more than studying tables, pie charts and statistics. The word economics evokes images of trade, finances, stocks, shares, corporate companies, poverty, consumerism and many other facets of global and national economy. However, these are just the tip of iceberg when it comes to defining, economics. It is in essence, a very deep social science that goes beyond the study of money and financial transactions. It is a deep study of human behavior and the art of management of needs and wants (the famous law of demand), in an effective way.
An Introduction to Economics
Let us grasp the concept of economics, by taking a common example from our daily life. When we earn money, we spend it on electricity, food and several other necessities. An economist tries to analyze and study as to what are the various parameters that motivate or prevent someone to spend money. When analyzed for an entire nation, it is a study of the way national resources are managed, money is spend, roads and highways are built and schools and colleges are built.
Economics is an integral part of each and every aspect of life. Right from buying a house or grocery or a luxury sedan or starting a business, to saving a penny off income tax, to investing in stocks of a specific share, economics has a deep role to play in everything.
The father of modern economics, Adam Smith (1723 - 1790) conceptualized several disciplines of economics and studied various reasons why some nations are wealthy whereas several others are in extreme poverty. The two broad categorizations of economics are micro economics and macro economics.
Macroeconomics studies the economy of a nation by analyzing the total output of a nation. It focuses on how a nation distributes limited resources of land, labor and capital so that profit can be maximized. Macroeconomics is the study of the society on a whole and how effectively a society is managed by the government. The growth and development in trade and foreign relations leads to better economy and that is why, macroeconomics focuses on long term objectives.
Microeconomics, on the other hand, takes care of similar issues but from an individual's perspective. It studies how the income and spending habits of an individual are dependent on national earnings and growth. Hence, microeconomics analyzes the market prevailing in a nation and also spending habits of individual consumers. There are numerous differences between microeconomics vs macroeconomics and knowing them can broaden your understanding of this social science.
Grasping core concepts of economics remains incomplete without talking about Keynesian economics. John Maynard Keynes was British economist along with several other economists tried to explain the cause of the Great Depression of 1929. This led to further study of several concepts about macroeconomics. The Keynesian economic models dominated the world in the last century however, they're no more followed in this century. Nevertheless, many economic theories have been derived from Keynesian model of economics. Before even Keynesian economics gained popularity, the theories of economists in 15th and 16th century was called classical economics.
Covering everything on economics and its various branches is not possible in the purview of this article because it is vast subject with numerous disciplines. Debates have been roaring in the international economics about several features of economics like impact of globalization, capitalization, economic recession and increasing poverty rates in several African countries.
Many scholars and economists support the laissez-faire economy wherein there is minimum intervention of the government. One of the classic examples of laissez-faire economy is the Soviet Union economy that failed owing to excessive control of the State while the US gained immense success by making the economy liberal.
Economics is mainly the study of how we respond when we have limited resources at our disposal; it is a study of adjusting wants and needs thereby affecting demand and supply in the market. There is hardly any part of society that is not affected by changes in national and global economy. It is the science of human living, indeed.
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