Economics is about what?

Answer 1

Economics is about a government's or a society's exchange of goods and services. For instance, the tax system, tax rates, national debts, finances, banking systems, jobs/income, stocks, and everything else that is related to money.

One section of economics is the theory of what you can do with a limited supply. For example, how changes can increase or decrease wealth (e.g. technological innovations, depreciation).

It is also the study of the person (producer or consumer). Rational thinking, happiness and game theory often come into consideration. For example why do you choose x over y? Or why is the economic power of crowds more knowledgeable than that of individuals?

Economics can also be defined as "The study of choice making by individuals, institutions, societies, nations and the world, under conditions of scarcity and surplus, towards maximizing benefits and satisfying the unlimited present and future needs." The subject Economics is defined as the "Study of choices by all in maximizing production and consumption benefits with the given resources of scarce and surplus, for present and future needs."

Macro-economics and micro-economics

Economics is generally divided into two sub categories, macro-economics and micro-economics.

Macro deals with the overall performance indicators of an entire economy. So it involves things like government spending, GDP and unemployment rates. It includes models that explain relationships between national income, aggregate output and inflation.

Micro on the other hand studies and deals with market mechanisms. This mainly includes studying households and firms and how they come together to allocate limited resources. This determines the price of goods and services and this relates to quantity demanded and quantity supplied.

Most of the macro principles are built on micro concepts.

(see the related questions)

Answer 2

One section of economics is the theory of what you can do with a limited supply. For example, money in the economy and how different elements can increase or decrease everyones wealth, eg technological innovations, depreciation etc.

It is also the study of the person. Rational thinking, happiness and game theory often come into consideration. For example why do you choose x over y? Or why do the power of crowds know more than individuals?

For some its quite a daunting subject, but in practice its really quite simple. I know many who are instantly turned off when you show them a simple equation like

Y = C + I + G + (X-M)

but when its broken down for you its quite easy really, for me anyway!

Answer 3

Economics is the study of how we produce, distribute and consume goods and services in our economy.