What is the economy?
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What Does economy Mean
We explain what economics is and what is its object of study. In addition, its importance and the different branches or types of economy.
What is the economy?
The Economy (or Economic Sciences ) is a social science whose field of interest is constituted by the ways in which a society organizes itself to meet their material and immaterial needs consumption through a cycle of production, distribution and exchange of assets that are ideally perpetuated over time .
Economy, in other words, is the study of the modes of organization and distribution of scarce goods that each society requires and therefore produces or acquires through different strategies , in order to satisfy the greatest amount of demand from a finite number tangible or intangible assets.
Said like this, we could deduce that the Economy tries to understand the production and consumption processes of any human group, to aspire to an ideal distribution and management of resources. This has allowed him to apply himself to various areas of study and to work with other specific disciplines , such as Law , Administration , business , politics , war , science and a long etcetera.
At the same time, Economics makes use of tools and processes from various areas of knowledge, such as psychology , philosophy , history , etc. to help you understand the economic dynamics of societies. It is a multidisciplinary knowledge dating from the times of Classical Antiquity (especially Aristotle).
See also: Foreign trade
Object of study of the economy
The specific object of study of Economics can be defined around three main axes:
- The processes of extraction, production, distribution , exchange and consumption of the goods and services that a society requires.
- The possible models of satisfaction of the infinite human needs from the finite set of available resources.
- The way people and societies survive, trade, prosper and operate financially.
In this way, the Economy is interested in a very wide range of objects of study, ranging from the pricing mechanisms of the goods and services available in a community , the behavior of financial markets and their impact on society, the trade internationally, the intervention of the state in domestic markets, the distribution of income and methods of combat poverty , to theories of growth and economic cycles and their impact on the societies that star.
Types of economy
Economics is a broad and complex discipline, in which numerous types or classifications can be distinguished, such as:
- Theoretical economics and empirical economics. The first pursues rational models of functioning and economic equilibrium for different societies, while the second confirms or refutes these models through their application or the economic history of nations.
- Microeconomics and Macroeconomics . The first refers to the choices of economic agents (individuals, companies and governments ) in order to satisfy their needs and scarcity. The second, on the other hand, views the economy as a national, if not global and international system, which analyzes the totals of the trade balance, the general trends and the data at a panoramic level.
- Normative economics and positive economics. This distinction is based on the fact that the first considers the duty of the economy, while the second studies economic behavior as something alive and present, changing.
- Orthodox and heterodox economics. An academic-type differentiation, in which the first one is anchored in the rationality-individualism-balance triad and is the one most commonly taught in universities, the traditional one; while the second encompasses a different and heterogeneous set of currents of economic analysis and prefers the approach based on institutions-history-social structure.