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Essential Principles of Economics. - Essay Example
Pages 7 (1757 words)
Adam Smith defined Economics as science of wealth. Economists define wealth as one that has "Value in use" and "Value in exchange". Economics is the study of how wants are satisfied and decisions made when faced with limited resources. The study of economics is concerned with how people get the goods and services they need and want…
This work helped in creating the modern academic discipline of economics and provided one of the best-known intellectual rationales for free trade, capitalism, and libertarianism. But there are critics like Murray N. Rothbard who've propounded that "Adam Smith perverted the development of sound economic analysis by failing to advance valid extant theories of value, money, and income distribution". As a matter of fact Modern economics pretty much continues along Smith's line of analysis, which says that, 'a nation and the people do well when the economy does well, and when the economy is in crisis or doesn't do well, the nation suffers and so do the people as they don't always get the goods and services they need.' Economics in general may be divided into;
Microeconomics: Defined at the level of individual choices. This branch of economics is mainly concerned with the decisions made by individual consumers, households, and firms and how these decisions interact with each other to form the prices of goods and services and the factors of production. This is basically a bottom up approach where looking at the smaller picture individual's relationship to the economy remains the focus area.
Macroeconomics: Defined at the level of aggregate results in which we study the national income, employment, interest rates, goods ...
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