Social science concerned with the production, distribution, exchange,
and consumption of goods and services. Economists focus on the way in which individuals,
groups, business enterprises, and governments seek to achieve efficiently any
economic objective they select.
Other fields of study also contribute to this
knowledge. Psychology and ethics try to explain how objectives are formed, history
records changes in human objectives, and sociology interprets human behavior in
social contexts. Standard economics can be divided into two major fields.
The
first, price theory or microeconomics, explains how the interplay of supply and
demand in competitive markets creates a multitude of individual prices, wage
rates, profit margins, and rental changes. Microeconomics assumes that people
behave rationally. Consumers try to spend their income in ways that give them
as much pleasure as possible. As economists say, they maximize utility. For
their part, entrepreneurs seek as much profit as they can extract form their
operations. The second field, macroeconomics, deals with modern explanations of
national income and employment.
Microeconomics data from the book, The General Theory of Employment,
interest, and Money by the British Economist John Maynard Keynes .His
explanation of prosperity and depression centers on the total or aggregate
demand for goods and services by consumers, business investors, and
governments. Because, according to Keynes, inadequate aggregate demand
increases unemployment, the indicated cure is either more investment by
business or more spending and consequently larger budget deficits by
government.
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