ECONOMICS

WHAT IS ECONOMICS?

Economics is the social science that analyzes the

production, distribution, and consuption of goods and
services.

The term economics comes from the Ancient Greek

“oikonomia”, where ‘oikos’ means “house” and ‘nomos’
means “custom” or “law”.
In these sense “oikonomia” means” management of a
household, or “rules of the house”.
 ECONOMICS ACCORDING TO:
 Alfred Marshall
-Economics is a study of man in the ordinary
business of life.

 Manuel “Mar” Roxas

- Economics is the heart and soul of a nation.

 Lionel Robbins
- Economics is the science which studies human
behaviour as a relationship between ends and scarce
means which have alternative uses.
 WHY DO WE STUDY ECONOMICS?

 Intellectual Value- the knowledge of economics is very useful

as it broadens our outlook, sharpens our intellect, and
inculcates in us the habit of balanced thinking.

 Practical Advantages- are much important than its theoretical

advantages.

 Personal stake in Economics- from personal point of views,

the study of economics is useful as it enables each of us to
understand better and appreciate more intelligently the
nature and significance of our money earning and money
spending activities.
 Economics for the Leader- the study of economics is not only
helpful from individual point of view but it also very useful for
the welfare of the community.

 Poverty and Development- the greatest advantage of

Economics is that it helps in removing traces of poverty from
the country.

 Economics for the citizen:

-such being, the importance of study of economics, it is
rightly remarked by Wooten that “ you cannot be in real sense a
citizen unless you are also in some degree an economist”.
TO SUM UP, WE STUDY ECONOMICS BECAUSE
OF THE FOLLOWING REASONS
 Understand the economy and society
-Free markets and how they work or why
they do not work
 Understand world affairs
-Elections- unemployment- oil prices-
exchange rates
 Understand market
- Pricing
 Become a well- informed citizen
-Interest rates and bank loans
 Think logically
- Specific way of thinking and making decisions.
 DIFFERENCES BETWEEN MACRO AND
MICROECONOMICS
Micro economics
 It deals with the decision making 
of single economic variables such
as the demand, price, consumer,
etc.
 It is narrow in scope and
interprets the small constituents of 
the entire economy.
 It deals with the flow of various
factors of production from a single 
owner to a single user of those
resources
 It helps in developing policies  It helps in developing policies
appropriate resource distribution
a firm level.
Macro economics
It deals with averages and
aggregates of the entire economy
such as national income,
aggregates output, aggregate
savings, etc.
It has a wide scope and interprets
the economy of a country as a
whole.
It deals with the circular flow of
income and expenditure between
different sectors of the economy.
appropriate resource distribution
at economy level such as inflation,
unemployment level etc.
 IS ECONOMICS POSITIVE SCIENCE OR
NORMATIVE SCIENCE?
 Economics is a positive Science;
-a positive or pure analyses cause and effect
relationship between variables but it does not pass
value judgment. In other words, it states what is and
not what ought to be.
 Economics is a normative Science;
-as normal science,Economics involves value
judgement. It is prescriptive in nature and described
what should be the things. Thus normative economics
is concerned with welfare propositions.
 Economics is a science and as Art
THE FOUR QUESTIONS PERTAINING TO ECONOMICS?

 What is to be produced?
 How is to be produced?
 For whom is to be produced?
 WHAT ARE THE DIVISIONS OF
ECONOMICS?
 Economics is concerned with
production
 Economics is concerned with
Distribution
 Economics is concerned with
Consumption
 Economics is concerned with Good and
Services
 Economics deals with Public Finance