Question

Describe the underlying circumstances, conditions, or problem that gives rise to a study of economics. Define the meaning of the word economics and discuss in a short essay the various approaches and systems of economics that have been tried in the past, are being tried now and the future

Answer 1

Describe the underlying circumstances, conditions, or problem that gives rise to a study of economics. Define the meaning of the word economics

Economics is a social science which tries to study the underlying factors of consumption, production and distribution of goods and services. It also analyses key trends such as interest rates, wages, demand and supply which are critical sub factors of the theory.

Through the study of economics, economists tend to propose ideas with the help of which the interests of all parties involved in an organization or the country as a whole such as owners of factors of production, the labor force and consumers as different units can benefit and maximize their interests respectively.

The foundations of economics were built by key players such as Adam Smith who advocated in his book the Wealth of Nations, how a country should engage in production of those goods and services, in which it has a relative advantage when compared with other countries respectively.

The circumstances or problems around which economics is largely built is the need for maximization of the interest of all stakeholders i.e producers, consumers and distributors for the betterment of the entire economy as studied on a whole.

The basis of economic lies in maximizing the interest of all parties and ensuring that an economy can function in a better manner. Conditions such as inflation, deflation in which countries have been unable to manage their demand and supply have been critical contributors towards the development of economics as a key science without which, most countries would fail to realize their true potential.

Other concepts such as Gross Domestic Product were later innovations which led to countries being able to assess their own performance and later compare this with other nations also.

Discuss in a short essay the various approaches and systems of economics that have been tried in the past, are being tried now and the future

One of the key approaches to studying economics lies among considering economics as two separate branches which are macro economics and micro economics. These two systems are the back bones of economic development.

Micro economics considers individual firms and consumers and tries to solve their problems of profit maximization and consumer equilibrium. It tries to analyse how both consumers and producers as different parties can maximize their interests at the same time leading to stability within a country.

Macro Economics on the other hand deals with considering the entire country as one single unit and then devising policies on factors such as labor, Aggregate Supply and Demand and Interest rates so that common good can be achieved for all parties respectively.

It is around these two approaches that systems of economics have been developed in the past, and are being constantly innovated today and will continue to be a trend in the future respectively.

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