What is Economics? A Definition of Economics

Ever wonder why food costs rise when gas prices spike? Ever question why U.S. politicians worry when other countries talk of going bankrupt? Ever wonder why you can’t get a good interest rate on your savings account? All of these phenomena can be explained through economics.

Economics is the study of the production and consumption of goods and the transfer of wealth to produce and obtain those goods. Economics explains how people interact within markets to get what they want or accomplish certain goals. Since economics is a driving force of human interaction, studying it often reveals why people and governments behave in particular ways.

There are two main types of economics: macroeconomics and microeconomics. Microeconomics focuses on the actions of individuals and industries, like the dynamics between buyers and sellers, borrowers and lenders. Macroeconomics, on the other hand, takes a much broader view by analyzing the economic activity of an entire country or the international marketplace.

A study of economics can describe all aspects of a country’s economy, such as how a country uses its resources, how much time laborers devote to work and leisure, the outcome of investing in industries or financial products, the effect of taxes on a population, and why businesses succeed or fail.

People who study economics are called economists. Economists seek to answer important questions about how people, industries, and countries can maximize their productivity, create wealth, and maintain financial stability. Because the study of economics encompasses many factors that interact in complex ways, economists have different theories as to how people and governments should behave within markets.

Adam Smith, known as the Father of Economics, established the first modern economic theory, called the Classical School, in 1776. Smith believed that people who acted in their own self-interest produced goods and wealth that benefited all of society. He believed that governments should not restrict or interfere in markets because they could regulate themselves and, thereby, produce wealth at maximum efficiency. Classical theory forms the basis of capitalism and is still prominent today.

A second theory known as Marxism states that capitalism will eventually fail because factory owners and CEOs exploit labor to generate wealth for themselves. Karl Marx, the theory’s namesake, believed that such exploitation leads to social unrest and class conflict. To ensure social and economic stability, he theorized, laborers should own and control the means of production. While Marxism has been widely rejected in capitalistic societies, its description of capitalism’s flaws remains relevant.

A more recent economic theory, the Keynesian School, describes how governments can act within capitalistic economies to promote economic stability. It calls for reduced taxes and increased government spending when the economy becomes stagnant, and increased taxes and reduced spending when the economy becomes overly active. This theory strongly influences U.S. economic policy today.

As one can see, economics shapes the world. Through economics, people and countries become wealthy. Because buying and selling are activities vital to survival and success, studying economics can help one understand human thought and behavior.

Read more on economics 101.

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{ 732 comments… read them below or add one }

shamsher wali December 26, 2015 at 7:44 pm

Economics is a study to fullfill Demands according to our Needs and Desires

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Chidera osita January 4, 2016 at 1:50 pm

Economic is a branch of knowledge that allow production, comsumption and increase of wealth

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Adeboye January 7, 2016 at 6:55 am

why study economic?

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Alisher January 9, 2016 at 11:58 pm

An economist is someone who studies production and distrubition of resourses , goods and services !!

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Ahmad Khan January 16, 2016 at 10:12 am

Economic is the study of the factor that influnce incom welth and will being it is social science which incorporates mathematics . physics. and many other disciplineces. politics law geography. Psychology. Etc

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sylvester January 17, 2016 at 2:38 pm

Economics is the study of human behaviour, money, and wealth of the nation

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Orojobi Ezekiel Oluwatobi January 21, 2016 at 9:36 am

Economics is a social science which help to on how to accumulate, produce and distribute wealth. Mind you, Wealth is nt jst about finance alone, bt ur acquirement through ur wants e.g ur chair in d home is a wealth, d way u manage it is Economics. Also d fulfilling the unlimited wth d Limited resources is Economic.

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Chijindu .c. January 26, 2016 at 10:58 am

I chijindu defined Economics as a social science which studies human behaviour in a relation to his environment which means end and scarcity

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Chijindu .c. January 26, 2016 at 11:00 am

I chijindu defined Economics as a social science which studies human behaviour in a relation to his environment

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Dammyluv January 30, 2016 at 8:00 am

Economics is the branch of knowledge concerned with the production, consumption and transfer of wealth.

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preshuzkid February 2, 2016 at 9:47 am

Economics Is a science that studies human behaviour as a relationship between ends and scarce use which has alternative use.

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ologun Ayodele March 11, 2016 at 12:03 pm

Economics is the social science that deal with man daily activities towards the interaction of forces of demand and supply.

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Joseph Tina February 12, 2016 at 2:04 am

Economic is a science that study human behaviour as a relationship between end and scarce which has alternative uses

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Naima imran February 13, 2016 at 12:11 am

economics can simply be define as a social science subject that study total behavior with the relationship between end/wants and scarce which have alternative uses

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Kwaw Joel Moses February 15, 2016 at 5:14 am

Economics is the efficient and effective way of mobilizing scarce resources to produce goods and services to satisfy our unlimited wants.

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Onehi Abo Mercy February 16, 2016 at 11:28 am

Economics is refers to the production of goods and services and the knowledge to combine them into useful products for human use

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emmanuel mhlanga February 17, 2016 at 3:20 am

Economics is the study of how society scare resource that we intended to satisfy unlimited human needs.

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Robertson February 18, 2016 at 11:18 pm

Economics =it is how man tries to get the greatest satisfaction from his limited resources

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Bikash Pan February 22, 2016 at 1:30 pm

Economics is the study of those activities that involves production and exchange among people .

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Angiugwubelye john March 2, 2016 at 12:57 pm

Economic can b define as the lifewire of a Nation.

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Martin Luther John March 4, 2016 at 1:39 am

Economics is the study of social science which helps to satisfy unlimited human wants/ends by maximising scarce resources to produce goods and services of which one way or the other brings wealth.

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ammara malik April 5, 2016 at 5:58 am

economics apply on men

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Martin Luther John March 4, 2016 at 2:02 am

Please am a Senior High School graduate from Ghana in West Africa. I study business programme in school and Economics was my favourite subject, and I want to be an Economist to help my Country Ghana and the World at large but there is no resources to enable me accomplish my goal . Please I need a financial help from anyone around the world to ensure me achieve my ambition. And I promise, I will not disappoint the fellow. Thanks this is my contact 0248642878.

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syed March 25, 2016 at 9:43 pm

economics is a science which study human behavior as a relation ship between and a scare means which have alternative uses

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ammara malik April 5, 2016 at 6:01 am

best wishes

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Okpe francis March 5, 2016 at 3:59 am

Economics is the study of production and consumption of good and transfer of wealth to produce and obtain those goods.by Lecturer B,B,C okpe in kogi state.

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Abdulmalik Zubairu March 7, 2016 at 9:00 am

Economics is define as a social science which study human beheaviour as a relationship between earn and scarcty which means alternative uses.

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Tiapo Jude March 7, 2016 at 9:57 pm

Economics is the effective study of how, and goods and services are produced, used, and for the production of further goods and services by individuals, countries and the world at large.

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Martin B. Brilliant March 10, 2016 at 6:17 am

The article describes three theories but there’s something missing. The classical theory is outdated, and therefore flawed: modern markets don’t work that way. Marxism won’t work because it doesn’t provide for capital to take advantage of new technology, and it doesn’t really solve the problems of the classical theory. Keynsianism is a macroeconomic theory and doesn’t address the flaws in market theory at all.

Governments currently employ vast regulatory systems in an effort to correct the flaws in modern market systems. Without a theory to support that effort, it becomes a process of unrelated decisions to plug holes after they open, allowing the entities being regulated to influence the decisions in their favor. Is there such a theory?

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ROBERT SAMUEL (FAMOUSTWINS) March 13, 2016 at 3:43 am

I WILL SAY THAT ECONOMIC IS THE STUDY OF MANAGING OUR VALUABLE THINGS IN OTHER TO YIELD WEALTH.

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Tema victor March 13, 2016 at 11:19 pm

Economics is all about how people make choice

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Salisu March 17, 2016 at 3:33 am

Econoic is a way that people use to exchange good and service

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kenneth Ray Henderson March 17, 2016 at 9:06 pm

Graduated from pennfoster private highschool with 21st century skills such as the ability to use technology in English language Arts,Science,Math,and social studies along with 21.5credits and Economics1(Macroeconomics)1credit.

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Rimamyekwe kusho April 1, 2016 at 1:07 am

I want to be an economic studied

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Rimamyekwe kusho April 1, 2016 at 1:11 am

Economic is a social science that studies people and their institution go about.

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Yakubu Ojo Victor April 3, 2016 at 12:01 pm

The word Economics means Management. Hence economics in our own perspective way or view has to do with how we economized our resources inorder to yield or achieve or gain profit. In another view, it is also seen as a social science which deals with human behaviour or influence which helps to know our problems and how to solve them inorder to earn a living.otherwise helps us to research the solution that will lead to economy boom.

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yogesh naik April 14, 2016 at 6:37 am

economics is “earning” and “spending” of money.

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yogesh naik April 14, 2016 at 6:41 am

“how” to earn money and “where” spend money.

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Adib April 15, 2016 at 8:06 am

economics = up n down of human desires towards wealth n greed

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AADIL BASHIR MALLA April 19, 2016 at 7:55 pm

Economics is a branch of social science which deals with human behaviour in which consumer wants max. Satisfaction,producer wants max. Profit and society wants max. Social welfare

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syed April 25, 2016 at 3:44 am

economic is.a science which study human behavoir as a relation ship between and scare means which have alternative uses

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Ananya Sarraf April 25, 2016 at 10:04 am

Economics is our country’s economy……
It tells a lot about our social conditions…

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Odus April 29, 2016 at 1:01 pm

I define Economics as social science that study human welfare of what to produce, how to produce and whom to produce goods and service to satisfy human needs and wants.

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Egbunu siaka May 11, 2016 at 12:51 pm

economics is defined as what man has with what he does to get what he need.

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