The modern word “economics” has its origin in the Greek word “oikonomos” meaning a housekeeper. The two parts of this word ‘oikos’ – a house and ‘nomos’ – a manager show what economics is all about.
Economics is defined as the study of mankind in the everyday business of life. It is a social science. Economics studies our everyday lives and the general life of our communities in order to understand the whole economic system, to find economic laws.
Everyday business of providing the means of life is called by the general term “economy”. It is the system for the management, use and control of the money, goods and other resources of a country, community or household.
Economics is the study of economies. It includes a vast range of subjects.
It studies how the prices of labour, capital and land are set in the economy.
It explores the behaviour of the financial markets and analyses how they allocate capital.
It analyses the consequences of government regulation.
It examines the distribution of income.
It studies the upswings and downturns in unemployment and production.
It examines the patterns of trade among nations, etc.
Economics as a science consists of microeconomics and macroeconomics. Microeconomics studies individual producers, consumers or markets. It attempts (tries) to understand factors which affect prices, wages and earnings. Macroeconomics studies the economy as a whole; the overall values of output, of unemployment and of inflation.
The essence of economics is to produce valuable commodities using scarce resources and distribute them among the people.
Economics makes predictions for national economy.
III. Do the following exercises: