Economics Definition and Meaning
Economics is a financial aspect, it is the study of the manufacturing-production-development, distribution, as well as the consumption of services and goods; this is what we call “the economy”. Economic experts try to understand the economy as well as the way it reacts to different influences; for example, variations and adjustments in federal interest rates. Basically, it is a social science.
Modern Economics started in the year 1776, with the book written by Adam Smith; the wealth of nations. The author introduced the term “invisible hand” which was the concept fundamental to the work, the idea that the industry while seeming turbulent, is really guided to create the variety of services and the right amount of the goods. If the goods are more than required, there’ll be an economical inventor to make less. On the other hands, if the goods are less, there will be a good economic incentive to make more. The invisible hand is basically a natural phenomenon that guides capitalism as well as the free markets by means of competition for limited resources. This was the first stage of modern economics.
Macro and Microeconomics
Economics is an area that can be split up into a variety of different divisions, methods of analysis, and schools. There are two methods of analysis; macroeconomics and microeconomics; economics in aggregate and economics in firms and individuals, respectively. Economic experts have exercised theories of markets, which estimate real world behaviors and trends.
Most of the experts in the science of the economics advocate a “Laissez Faire” Economy, which means an economy with negligible government involvement (subsidies, tariffs, regulations, and privileges). It is an economic system which allows transaction between two parties without any restrictions from the government. Why they advocate such economics? Look at the breakdown of the Soviet Union; how they failed due to the government intervention. The successful model of a Laissez Faire economy is the USA.
According to the ancient resources, Chanakya, a legal as well as the chief advisor of Maurya Empire, founded the “Arthashastra”, which is an Indian treatise on economic policy.
The economy and economic system, both terms carry the same meaning. The range of economy focus on the social science of economy; however, may likewise incorporate economic geography, economic anthropology, economic history, and economic sociology. Each and every single profession, economic activity, and occupations contribute to the economy. The economic system plays a role in all the sectors. In short, there is nothing without economy when it comes to consumption/usage, saving, and investment.