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Economics is a discipline of social science that studies how people use resources in times of scarcity. The study of economics also involves the subjects of wealth, finance, and banking. All of these areas are studied to gain knowledge of past events and trends. This historical knowledge can then be applied to current events to form predictions for the future.
There are two different main focuses within economics study: microeconomics and macroeconomics. Microeconomics studies people and their choices, such as why they chose to move to a certain neighborhood or how they decided to budget their paycheck. This information helps economic researchers understand such things as why people aren’t able to save for retirement and other similar financial issues that can have an effect on the economy. Macroeconomics studies the bigger picture and larger groups, such as industries, banking systems, business cycles, and governments. This helps researchers understand such things as the causes of recessions or the reasons behind a rise in immigration or a spike in gas prices and how the economy will be affected.
In the early days, economics was part of the discipline of philosophy. Scotsman Adam Smith, who was a philosopher, is considered the “father of modern economics.” In the 1700s, Smith established the first system of political economy, which he detailed in his book The Wealth of Nations. He proposed that rather than measuring a country by its gold and silver, it should be judged by its production and commerce. He was a proponent of free-market economies, in which open markets and consumers decide the prices of goods and services. Smith’s theories formed the foundation for classical economics. In the 1800s, Karl Marx introduced the concept of socialist economics in direct response to the theories of classical economics. Marx expressed the belief that in a capitalistic society, the value of things is grossly inflated and the workers who are responsible for creating the value of things are exploited. Public ownership and managed pricing are core features of socialist economics.
As stated by the American Economic Association: “Important public policy debates revolve around questions of economics. Governments the world over employ economists to help understand how government health programs will affect the incentives of doctors, whether farm subsidies will raise or lower prices at the grocery store, and the best ways to fight poverty.” The knowledge and skills that economics majors gain is useful in a wide variety of industries and there are numerous career fields in which they work. They often pursue careers in business, law, medicine, international relations, nonprofit organizations, think-tanks, and in academia.
Economists are employed in finance and insurance, government agencies, scientific research and development services, and management, scientific, and technical consulting services. There are business economists, government economists, and academic economists who specialize in certain studies, such as microeconomics or macroeconomics, banking systems, international trade procedures and laws, public finance, or labor economics. There are also market research analysts, who study market conditions for products and services. In academia, economics professors work for universities and colleges, teaching economics and researching and writing on the subject.
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