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What Is Economics?


Question: What Is Economics?
Answer: There's no one universally accepted answer to the question "What is economics?" Browsing the web, we will find various answers to the question:

What is Economics? - How Others Define Economics

The Economist's Dictionary of Economics defines economics as "The study of the production, distribution and consumption of wealth in human society."

Saint Michael's College answers the question "What is Economics?" with the answer "Most simply put, economics is the study of making choices."

Indiana University - Purdue University Indianapolis answers the question "What is Economics?" with the explanation "Economics is a social science that studies human behavior. Economics has a unique method for analyzing and predicting individual behavior as well as the effects of institutions such as firms and governments, or clubs and religions."

What Is Economics? How I Would Define It

If I were asked to provide an answer to the question of "What is Economics?" on a test, I'd probably write the following explanation:

"Economics is the study of how individuals and groups make decisions with limited resources as to best satisfy their wants, needs, and desires".

From this definition, we can break down the study of economics into two broad categories - microeconomics and macroeconomics.

What is Microeconomics?

In the article What is Microeconomics? we see that microeconomics "deals with economics decisions made at a low, or micro, level. How does the change of a price of good influence a family's purchasing decisions? If my wages rise, will I be inclined to work more hours or less hours?"

What is Macroeconomics?

Contrast the above definition to the study of macroeconomics, which deals with the sum total of the decisions made by individuals in a society, such as "how does a change in interest rates influence national savings?". More information can be found in What is Macroeconomics?

What is Economics - Where to Go From Here?

Now you know what economics is, it is time to expand your knowledge of the subject. Here are 6 more entry-level FAQs to get you started:
  1. What is Money?
  2. What is the Business Cycle?
  3. What are Opportunity Costs?
  4. What does Economic Efficiency mean?
  5. What is the Current Account?
  6. What are Interest Rates?

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