Economics

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Economics is the study of how people make choices to satisfy their wants.

There are three main concepts that are useful for understanding economics.

[edit] Three concepts

Economics is a science that studies how human beings try to make use of the limited resources to satisfy their wants, such as food, with only a limited amount of goods available (known as scarcity). For example, a society can grow only a limited amount of food.

[edit] History

18th century analysis of wealth
classical economics
Marxist economics
neoclassical economics
welfare economics

Economists are strongly influenced by their times. Ricardo lived in a time of expanding trade. Karl Marx lived in a time where workers' conditions were very poor. Keynes lived through the great depression of the 1920s. Today's economists have lived through a long period of economic growth. The history of economics follows world history. It is important to know world history to understand or compare different economic theories.

[edit] Branches of economics

The two main branches of economics are microeconomics and macroeconomics. Microeconomics looks at the behavior of what are called 'individual actors' (an individual, a household, a business or even groups of those). Microeconomics looks at prices of things and of services. It wants to help people decide how to divide society's resources. To do this, microeconomics wants to understand how decisions are made and how these small decisions affect bigger things. Macroeconomics looks at the economy as a whole, trying to explain the causes of numbers like national income, employment rates, and inflation. Connecting the two branches has been important and the general idea since the early 1980s. A good macroeconomic theory is based on microeconomics, meaning one can explain macroeconomic events using microeconomics for individuals.

There are a number of smaller branches that do not fit neatly into one of the two main branches, including: