According to Adam Smith, Economics is the science of wealth. It is the discipline of studying organisation of economic activities in society. Every economic system has goals that are Efficiency, Equity, Security, Freedom and Incentives. It is a present fixture in every economy but with a different order of priorities. Every economy has to answer three questions including what to make, how to make and from whom it should be made. Central government takes decisions in a Command economy, customs and rituals take the role of decisions in Traditional economy and forces of demand and supply in Market economy. Micro and macroeconomics are the two major branches studied under this discipline.
Microeconomics enables us to examine Revenue, Costs, Profits, and Economic Costs that are generated by Individual Business. It is the branch of economics that examines choices and interaction of individuals. Here the units of analysis are one person, one product, one firm or one industry.
Macroeconomics is an overall view of the economy’s performance and some issues that are majorly involved includes Unemployment, Inflation, Government Expenditures, and Banking. The overall performance of the nation is considered through national income accounting and thus enables the policy makers to compare and make policies in favour of the economy. They compare the levels of production and efficiency at regular intervals, gauge the long-run status of an economy and make polices depending on its growth, stagnancy and decline. They focus on creating policies that will help in promoting a positive outlook and detour negative results.
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