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Economy – Definition, Origin, Important, Objects, and More


Economy Definition

Economy Definition, The economy is of ancient use since it derives from the Greek terms Oikos (house) and nomos (rule), which means “housekeeping” or “domestic administration.”

It is a social science that studies the laws of production, distribution, exchange, and consumption of goods and services that man needs or wants. In almost all fields, the needs of man are superior to the means available to satisfy them. Hence economic activity is derived.

It seeks to set the principles and the corresponding rules of application, destined to put natural resources, means of production, capital, work, technique, and the mechanics of human relations in the function of society’s life and thus avoid a future economic crisis.

Even being a social science, economics determine by its object of study to employ mathematical analysis continuously.

Origin of the Economy

Important Segmentations of the Economy Definition

There are several ways to segment the economy. We are going to differentiate each segmentation:

1. Study Areas

The economy can divide into two large areas of study:

Macroeconomics: Study the global functioning of the economy as an integrated whole.

Microeconomics: Study the economic behavior of companies, households, and individuals.

2. Economic Approaches

Economic thought has led to many economic theories and schools. We can separate them into two major economic approaches:

Interventionists: They defend the need for active State intervention to solve economic problems.

Classical economists or economic liberalists: They defend private property and voluntary contracts. And also, they do not consider the intervention of the State necessary to solve financial problems.

3. Philosophical Currents

Also, we can separate the economy into two types of philosophical currents:

Positive economy: It refers to postulates that can verify.

Normative economy:  It base on value judgments that cannot verify.

Objects of Study of the Economy Definition

The main objects of study of the economy over time have been:

Approaches to the Economy

  1. Many various approaches are developed for the study of economics. Initially, as part of political and social history, only its economic aspects were considered.
  2. Over time, economic history was acquiring a place of its own. Institutions such as the Constitution of a country, the history of individual taxes, or a particular sector, general are part of a nation’s economic development, were studied.
  3. And also, the use of figures and explanations of countries’ development soon became an irreplaceable ingredient for writing economic history.
  4. Therefore, creating national accounts since the beginning of the 20th century in some countries was an essential factor for the discipline.
  5. Various economic development theories promote sometime later, driven by understanding the various changes, stages, or predictable and identifiable periods.
  6. These approaches were those of Marxist origin based on the class struggle, the Schumpeterian who consider changes based on innovation and technological change, and those of the style developed by Walter W.
  7. And also, Rostow that base on the stages of the development of societies. And economies.
  8. It should note that the doctrines of economic thought provide more specific definitions.
  9. And also, essential currents that have existed: mercantilism, physiocracy, classical school, Marxist school, Austrian school, neoclassical school, Keynesian school, monetarist school.
  10. It can say that the definition of economics provided by mercantilism is not the same as that provided by the classics, Marxists, or Keynesians.
  11. Although the essence of the economy and the object of study is similar, evaluating the production and the relationships established between agents and markets are different depending on the school to which it refers.

Growing in Economy

Economic growth is one of every society’s objectives and implies a remarkable increase in income and the way of life of all individuals in a community.

There are many ways or points of view from which the growth of a society measure. And also, one could take investment, interest rates, consumption, government policies, or policies to promote savings as axes of measurement.

All of these variables are tools used to measure this growth. And this growth requires a measure to establish how close or close we are to develop.

What are the Types of Economy?

1. Education Economy

The economics of education deals with educational goods that are a form of services produced by society. Educational assets have their peculiar characteristics: utility and scarcity.

2. Market Economy

3. Supply Economy

4. Heterodox Economy

5. Informal Economy

6. Free Economy

7. National Economy

8. Planned Economy

9. Solidarity Economy

10. Submerged Economy

11. Scale Economy

Also Read: What is Outbound Marketing? – Examples and More

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