What is Economics? A Definition of Economics

Ever wonder why food costs rise when gas prices spike? Ever question why U.S. politicians worry when other countries talk of going bankrupt? Ever wonder why you can’t get a good interest rate on your savings account? All of these phenomena can be explained through economics.

Economics is the study of the production and consumption of goods and the transfer of wealth to produce and obtain those goods. Economics explains how people interact within markets to get what they want or accomplish certain goals. Since economics is a driving force of human interaction, studying it often reveals why people and governments behave in particular ways.

There are two main types of economics: macroeconomics and microeconomics. Microeconomics focuses on the actions of individuals and industries, like the dynamics between buyers and sellers, borrowers and lenders. Macroeconomics, on the other hand, takes a much broader view by analyzing the economic activity of an entire country or the international marketplace.

A study of economics can describe all aspects of a country’s economy, such as how a country uses its resources, how much time laborers devote to work and leisure, the outcome of investing in industries or financial products, the effect of taxes on a population, and why businesses succeed or fail.

People who study economics are called economists. Economists seek to answer important questions about how people, industries, and countries can maximize their productivity, create wealth, and maintain financial stability. Because the study of economics encompasses many factors that interact in complex ways, economists have different theories as to how people and governments should behave within markets.

Adam Smith, known as the Father of Economics, established the first modern economic theory, called the Classical School, in 1776. Smith believed that people who acted in their own self-interest produced goods and wealth that benefited all of society. He believed that governments should not restrict or interfere in markets because they could regulate themselves and, thereby, produce wealth at maximum efficiency. Classical theory forms the basis of capitalism and is still prominent today.

A second theory known as Marxism states that capitalism will eventually fail because factory owners and CEOs exploit labor to generate wealth for themselves. Karl Marx, the theory’s namesake, believed that such exploitation leads to social unrest and class conflict. To ensure social and economic stability, he theorized, laborers should own and control the means of production. While Marxism has been widely rejected in capitalistic societies, its description of capitalism’s flaws remains relevant.

A more recent economic theory, the Keynesian School, describes how governments can act within capitalistic economies to promote economic stability. It calls for reduced taxes and increased government spending when the economy becomes stagnant, and increased taxes and reduced spending when the economy becomes overly active. This theory strongly influences U.S. economic policy today.

As one can see, economics shapes the world. Through economics, people and countries become wealthy. Because buying and selling are activities vital to survival and success, studying economics can help one understand human thought and behavior.

Read more on economics 101.

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{ 562 comments… read them below or add one }

Mujeb Osmani January 4, 2015 at 7:12 am

Economic is a science that making satisfy human with unlimited wants into limited resource

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Bilal Hussain January 5, 2015 at 7:24 am

Economics is the study of resource allocation under scarcity.

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arian January 7, 2015 at 12:48 am

Economic in today world had gone beyond the politics, cultures, religions & and every other aspects of life and it is one of multidimensional fields that affects several aspects of life in different ways….

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raja January 10, 2015 at 1:18 am

kumar

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nancy ofori addo January 12, 2015 at 10:41 pm

economics is the science that studies human behaviour in relationship with the ends and scarce means which have alternative uses

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SMUSHARA January 15, 2015 at 2:46 am

the underlying fact is economics has the following attributes:it is a science, it studies human behaviour..allocation of limited resources(scarce). satisfaction of unlimited wants

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Aaqib January 15, 2015 at 10:21 pm

Economics is what economists do

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Aaqib January 15, 2015 at 10:22 pm

Economics is the science of choice

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shivpriya January 16, 2015 at 10:02 pm

Economics is such a subject that,every thing seems to understand but no..its very typical..when v go deeper nd deeper,it appears to get many questions nd doubts in mind..so its never ending info to me..

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Saye B. Wellbelleh January 20, 2015 at 12:02 pm

Economics is a branch of social science that deals with human behavior as it relates to the production, distribution, and consumption of goods and services.

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nosherwan January 22, 2015 at 6:40 am

Economics is the study of the production and consumption of goods and the transfer of wealth to produce and obtain those goods.

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nosherwan January 22, 2015 at 7:01 am

To clear the human wants by using limited resources that is possible by human efforts is called economics.

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oguntade adebola January 22, 2015 at 9:17 am

the subject economics is a very good and important course someone has to lean on. I just thank God for d life of our great evonomist , you have done a good job , great shout out to you all.

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kaleem ullah January 23, 2015 at 12:59 am

i want join please add me

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chukkyyoung January 23, 2015 at 2:15 am

felt gud for d fit back

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subhajit Kumae Dutta {SUBHA} January 26, 2015 at 8:01 am

what is economics>>>????

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fatima Abdulrashid naabba January 28, 2015 at 1:14 am

Economic is define by various authors is so many way.in fact,some argued tvrde are so many definition of economics as guste are economist.adam smith,(1776) for instance dedijer economics as equiry into the nature nd gayawa of the wealth of nation.

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mustafa March 10, 2015 at 12:51 pm

yeah there are many definition of economics from various economists but they are all discussing on one main point. i think that is study of choice!

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manjeet January 31, 2015 at 2:32 am

Sir, Bank k Interview me economics se related kis type k questions puche jate h..

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harpreet singh February 3, 2015 at 4:21 am

economics is a interesting subject,,,,it is very useful for all,,,,,

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Etuhu Alexander February 3, 2015 at 10:05 am

Economics is the study of our daily phenomina.
Economics is a light to every being that study it.
Economics gives us guide line on how to manage
our resources at home, community, and our various countries.
And also is the study of life.

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Ramjan Seikh February 5, 2015 at 6:58 am

‘Economics is the science which studies human behavious as a relationship between ends and scarce means which have alternative uses’

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Shridhar Borkar February 6, 2015 at 11:08 am

An enquiry of nature and causes of wealth of nations

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odiongodspower February 7, 2015 at 5:11 am

economics is a social science that deals with production,consumption numerous wants and scares being prounded by .c. robbins

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Ajayi Adedoyin February 9, 2015 at 1:10 am

Economics Deals the The Production,consumtion Of Goods And The Effect Of Those Goods To The Economy

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KAELO February 10, 2015 at 2:01 am

ECONOMICS IS OUR EVERYDAY LIFE

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Audu shola February 10, 2015 at 5:09 am

economics is a science of common sense. meaning the ability to use our common sense

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nqobile mkhonta February 12, 2015 at 6:22 pm

economics is the study of how people people choose to use scarce resources to produce valuable commodities and distribute them among different people

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SAMUEL DUFFU February 14, 2015 at 8:56 am

Economic explains the social behaviours of mankind given the limited resources and insatiable wants.

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ademola adewumi February 17, 2015 at 5:28 am

great expired

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ademola adewumi February 17, 2015 at 5:37 am

is through economic that help peopl to survine becaus econom help aloat of humanlity made head meat i pray to God almiaghty that the level of our econom we change

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charu February 18, 2015 at 9:09 am

Economics is dynamic and rational subject thorough which people fulfill their day to day necessity.

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15401197sami February 18, 2015 at 6:25 pm

Economics note.

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charu February 18, 2015 at 6:51 pm

Economy- it is framework under which people do economic activities in order to sustain their life

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hassanbello February 23, 2015 at 3:49 am

economic is study of how to choose a reasons

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Abdul February 23, 2015 at 6:00 am

Economic is a very good subject which we can easily learn how develop our organizations

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yusuf shah February 24, 2015 at 5:37 am

Fantastic economic downturn in the UK and Ireland for you guys

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mustafa March 3, 2015 at 6:34 pm

Economics is the study of efficiently allocating of resources to satisfy human wants.

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yusuf shah March 7, 2015 at 9:26 pm

Economic is a good subject

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yusuf shah March 12, 2015 at 11:15 pm

Economic is a good subject but you can also be used to work with the latest information and advice to protect the environment before printing this page for your business is a community cross between us we will have a sweet dreams come true love you so much for the latest information about your experience latest news

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