Economics is the study of production, distribution, and consumption of goods and services. It analyses how people and society look forward to gratify their desires and wants by way of inducements, options, and allotment of resources. The field of economics is diverse and you will find two common divisions namely microeconomics and macroeconomics. The former is at the level of individual choices whereas the latter is of aggregate results. Business, personal finance and government, all fall under the purview of economics. Some of the economic theories can freely be applied to non-monetary choices as well.
Field of study in economics
If you go into the details you will know that microeconomics deals with the economic behavior of individual units like businesses and households in terms of scarcity and government connections. Now, macroeconomics on the other hand studies the interaction between economic aggregates like national income, employment and inflation. Economics can also be segregated into a number of subdisciplines that do not invariably abide by the micro-macro cataloging. International economics, development economics, industrial organization, public finance, economic psychology, economic sociology, institutional economics and economic geography together constitute the subdisciplines.
Economists use different methodologies. Like for instance, econometrics, which uses statistical techniques to the study of economic data. Mathematical methods plus econometrics form the basis for computational economics. Moreover, a recent trend has come up where social psychology concepts and techniques are used to comprehend divergences from the predictions of neoclassical economics. Again, economic history deals with the study of economic transformation and of economic phenomena.
Modern mainstream economics
Modern mainstream economics is essentially based on neoclassical economics that came up in the late 1800s and models selections ended in the allotment of sparse resources. It also recognizes the existence of market failure and not to mention a few insights from Keynesian economics. It cracks problems on a microeconomic level by way of game theory and asymmetric information.
Rise of economic thought
The term economics came into being in 1870 but it was only after Alfred Marshall, a famous “neoclassical” economist that it gained prominence. What we refer to, as the “classical” economic theory was known as political economy through the 18th and 19th centuries, thanks to Adam Smith, David Ricardo and Karl Marx. The words “economy” and “economics” originated from the Greek word Oikos meaning “house” or “settlement”, and Nomos for “laws” or “norms”.
In the present world everything runs on the wheel of economics.