Economics & Economy

In the complex and ever-evolving tapestry of human society, the economy stands as a foundational thread, weaving together the fabric of our daily lives. The chapter "Economy Basics" embarks on a journey to unravel the fundamental principles that underpin economic systems around the world. From the intricate interplay of supply and demand to the pivotal role of businesses and government policies, we explore the essential building blocks of economic understanding. In this chapter, we delve into the core concepts that shape our financial landscapes, examining how decisions about production, distribution, and consumption influence the prosperity and well-being of individuals and nations alike. Whether you're an aspiring economist or simply seeking a deeper comprehension of the economic forces shaping our world, "Economy Basics" provides a solid foundation upon which to build your knowledge.

Economics & Economy

Economics is the social science that studies the production, distribution, and consumption of goods and services. In our day to day life we use a lot of economic concepts such as goods, market, demand, supply, price, inflation, banking, tax, lending, borrowing, rate of interest etc.

Economy:-

An economy refers to a man-made institute to satisfy human needs. A.J. Brown is of the view that 'An economy is a system by which people get a living. The way man tries to get a living differs in major aspects from time to time and from place to place. In primitive times 'getting a living' was simple but with growth of civilization, it has become much more complex. Here, it is vital to note that the way person earns his/her living must be legal and fair. Unfair and illegal means such as robbery, smuggling may earn income for oneself but should not be taken into consideration as profitable economic activity or a system of getting a living. It will thus be suitable to call that economy is a framework where all economic activities are carried out.

Some of the important characteristics of an economy are as follows:

• Economic institutions are man-made. Thus, an economy is what we make it.
• Levels of economic activities undergo continuous changes.
• Producers and consumers are the same persons. Thus, they have a dual role. As producers they work and produce certain goods and services and consume the same as consumers.
• Production, consumption and investment are the vital processes of an economy.
• In modern complex economies, we use money as a medium of exchange.

The Economy is the total engagement of producing, distributing, purchasing, consuming, exchanging goods and services and providing jobs in a country. Some of the major issues of a country’s Economy solved by Economics are:

1. How to do production?
2. What should be produced?
3. How much production?
4. When to do production?
5. For whom should it be produced?

What provisions will be made by the pertinent authority for economic growth? There are three types of economies found worldwide: Capitalist Economy, Socialist Economy, and Mixed Economy.

Economics: -

 "Economics is the study of how people choose to use resources."

Resources include the available time and talent, land, buildings, equipment, and other tools on hand, and the knowledge of how to combine them to create useful products and services. Important choices involve how much time to devote to work, to school, and to leisure, how many dollars to spend and how many to save, how to combine resources to produce goods and services, and how to vote and shape the level of taxes and the role of government. Often, people appear to use their resources to improve their well-being. Well- being includes the satisfaction people gain from the products and services they choose to consume, from their time spent in leisure and with family and community as well as in jobs, and the security and services provided by effective governments. Sometimes however, people appear to use their resources in ways that do not improve their well-being. In short, economics includes the study of labour, land, and investments, of money, income, and production, and of taxes and government expenditures. Economists seek to measure well-being, to learn how well-being may increase over time, and to evaluate the well-being of the rich and the poor. The most famous book in economics is the Inquiry into the Nature and Causes of The Wealth of Nations written by Adam Smith and published in 1776 in Scotland. Adam Smith defined the political economy as” an enquiry into the nature and causes of the wealth of nations

Although the behaviour of individuals is important, economics also addresses the collective behaviour of businesses and industries, governments and countries, and the globe as a whole. Microeconomics starts by thinking about how individuals make decisions. Macroeconomics considers aggregate outcomes. The two points of view are essential in understanding most economic phenomena.

Alfred Marshall cited a definition in his book Principles of Economics (1890): “Economics is a study of man in the ordinary business of life. It enquires how he get his income and how he uses it. Thus, it is on the one side, the study of wealth and on the other and more important side, a part of the study of man”.

• “Economics is the science which studies human behaviour as a relationship between given ends and scarce means which have alternative uses”. Lionel Robbins.
• Economics is the 'study of how societies use scarce resources to produce valuable commodities and distribute them among different people'. Paul A. Samuelson, Economics.
•