Economics !!!!

In the beginning
Adam Smith, generally regarded as the Father of Economics, author of An Inquiry into the Nature and Causes of the Wealth of Nations, commonly known as The Wealth of Nations.
Adam Smith, generally regarded as the Father of Economics, author of An Inquiry into the Nature and Causes of the Wealth of Nations, commonly known as The Wealth of Nations.

Although discussions about production and distribution have a long history, economics in its modern sense is conventionally dated from the publication of Adam Smith's The Wealth of Nations in 1776. In this work Smith defines the subject in practical terms:

Political economy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects: first, to supply a plentiful revenue or product for the people, or, more properly, to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign.

Smith referred to the subject as 'political economy', but that term was gradually replaced in general usage by 'economics' after 1870.

[edit] Areas of economics

Areas of economics may be classified in various ways, but an economy is usually analyzed by use of microeconomics or macroeconomics.

[edit] Microeconomics

Main article: Microeconomics

Microeconomics examines the economic behavior of agents (including businesses and households) and their interactions through individual markets, given scarcity and government regulation. Within microeconomics, general equilibrium theory aggregates across all markets, including their movements and interactions toward equilibrium.

[edit] Macroeconomics

Main article: Macroeconomics

Macroeconomics examines an economy as a whole "top down" with a view toward explaining the levels and interactions of broad aggregates such as national income and output, employment, and inflation and subaggregates like total consumption and investment spending and their components, including effects of monetary policy and fiscal policy. Since at least the 1960s, macroeconomics has been characterized by further integration of micro-based modeling of sectors, including rationality of players, efficient use of market information, and imperfect competition.[1] This has addressed a long-standing concern about inconsistent developments of the same subject.[2] Analysis of long-term determinants of national income across countries has also greatly expanded.

[edit] Related fields, other distinctions, and classifications

Recent developments closer to microeconomics include behavioral economics and experimental economics. Fields bordering on other social sciences include economic geography, economic history, public choice, cultural economics, and institutional economics.

Another division of the subject distinguishes two types of economics. Positive economics ("what is") seeks to explain economic phenomena or behavior. Normative economics ("what ought to be," often as to public policy) prioritizes choices and actions by some set of criteria; such priorities reflect value judgments, including selection of the criteria.

Another distinction is between mainstream economics and heterodox economics. One broad characterization describes mainstream economics as dealing with the "rationality-individualism-equilibrium nexus" and heterodox economics as defined by a "institutions-history-social structure nexus."

The JEL classification codes of the Journal of Economic Literature provide a comprehensive, detailed way of classifying and searching for economics articles by subject matter. An alternative classification of often-detailed entries by mutually-exclusive categories and subcategories is The New Palgrave: A Dictionary of Economics (1987).[3]

[edit] Mathematical and quantitative methods

Certain mathematical and quantitative methods may be used in analysis, modeling, or description of economic problems and data. These methods include the following.

[edit] Mathematical economics

Main article: Mathematical economics

Mathematical economics refers to application of mathematical methods to represent economic theory or analyze problems posed in economics. It uses such methods as calculus and matrix algebra. Expositors cite its advantage in allowing formulation and derivation of key relationships in an economic model with clarity, generality, rigor, and simplicity.[4] For example, Paul Samuelson's book Foundations of Economic Analysis (1947) identifies a common mathematical structure across multiple fields in the subject.

[edit] Game theory

Main article: Game theory

Game theory is often described as a branch of applied mathematics and economics that studies situations where multiple players make decisions in an attempt to maximize their returns. The essential feature is that it provides a formal modeling approach to social situations in which decision makers interact with other agents. Game theory generalizes maximization approaches developed to analyze markets, such as the supply and demand model. The field of game theory came into being with the 1944 classic Theory of Games and Economic Behavior by John von Neumann and Oskar Morgenstern. A major center for the development of game theory was the RAND Corporation where it helped to define nuclear strategies. Game theory has found significant applications in many areas outside economics as usually construed, such as ethics, political science, and evolutionary theory.[5]

[edit] Econometrics

Main article: Econometrics

Econometrics applies mathematical and statistical methods to analyze data related to economic models. For example, a theory may hypothesize that a person with more education will on average earn more income than person with less education holding everything else equal. Econometric estimates can estimate the magnitude and statistical significance of the relation. Econometrics can be used to draw quantitative generalizations. These include testing or refining a theory, describing the relation of past variables, and forecasting future variables.[6]

[edit] Computational economics

Main article: Computational economics

Computational economics encompasses both computational economic modeling and the computational solution of analytically and statistically formulated economic problems.

[edit] National accounting

Main article: National accounts

National accounting (more generally, social accounting) is a method for summarizing economic activity of a nation (or other geographic entity). The national accounts are double-entry accounting systems that provide detailed underlying measures of such information. National accounting includes measurement of national income and product, which allows tracking the performance of an economy and its components through business fluctuations or longer periods of time. It also includes measurement of the capital stock and wealth of a nation, international capital flows, and input-output relationships.