Introduction to Economics

Nature, Method and Tools in Economics

Economics Defined
Economics came from the Greek word oikonomia which literally means household management. Economics is a social science that deals with the efficient allocation of scarce and limited resources among unlimited wants and competing uses for the satisfaction of human wants and needs.

Branches of Economics
Microeconomics deals with the behavior of individual economic units.

Macroeconomics deals with the behavior of the economy as a whole.

Branches of Economics
Macroeconomics examines either the economy as a whole or its basic subdivisions or aggregates. aggregate a collection of specific economic units treated as if they were one unit e.g. household, business sector, government

Goals of Macroeconomics
Sustainable Economic Growth. Prolonged periods of high production thereby developing a higher standard of living. Price Stability. Avoiding large upswings and downswings in the general price level.

Goals of Macroeconomics
Full Employment. Provide suitable jobs for all who are willing and able to work.

Production Possibilities Curve

mangoes

. unattainable / infeasible

. attainable,
inefficient

. attainable, efficient
bananas