All You Need to Know About Economy

All You Need to Know About Economy

The economy can be framed within the group of social sciences since it is dedicated to the study of production and exchange procedures and the analysis of the consumption of goods (products) and services. The word comes from the Greek and means “administration of a house or family”.

In 1932, the British Lionel Robbins provided another definition of economic science, considering it as the branch that analyzes how human beings satisfy their unlimited needs with scarce resources that have different uses. When a man decides to use a resource for the production of a certain good or service, he assumes the cost of not being able to use it for the production of a different one. This is called opportunity cost. The function of the economy is to provide rational criteria so that the allocation of resources is as efficient as possible.

Broadly speaking, two philosophical currents can be mentioned regarding the economy. When the study refers to postulates that can be verified, it is positive economics. Instead, when it takes into account claims that are based on value judgments that cannot be tested, it is called normative economics.

Economics is part of the social sciences. According to Abbreviationfinder, EC stands for Economy.

Schools of economic thought

For the German Karl Marx, economics is the scientific discipline that analyzes the relations of production that exist within society. Based on historical materialism, Marx studies the concept of labor value, which postulates that value has its objective origin according to the amount of labor necessary to obtain a good.

It should be noted that there are numerous schools of economic thought, which present different approaches to analysis. Mercantilism, Moneratism, Marxism, and Keynesianism are some of them.

It can be said that the economy analyzes how the human being satisfies his unlimited needs with scarce resources.

Different types of economy

The word economy has many uses that allow it to be linked to different aspects of commercial exchanges or supply-demand relationships that exist. Some of these meanings are:

Sustainable economy, also known as sustainable development, is a new term that has become fashionable in recent years and encompasses a social life project based on the reuse of raw materials for various purposes. It is about changing the productivity process based on an economy based on caring for the environment and improving the quality of life of a society. Basically, it seeks to satisfy the needs of the generations that are living in a certain temporary space without putting at risk the subsistence or the economic possibilities of future generations.

Business economics is the way in which an organization can manage its resources and services, offering a competitive vision against the market. It uses several scientific disciplines that allow it to carry out this work. It is a way of applying economics in the field of a company and external values ​​such as stock market indices, market demand and other variables must be taken into account for its proper functioning.

Natural economy as defined by the biologist MT Ghiselin, is the study of the consequences that scarcity causes in living beings. Proposing a deep analysis of human actions and their secondary effects on the environment.

Political economy is the study of human behavior, examined within a characteristic legal context. The political economy is related to the natural economy in that human actions, its political economy can affect the natural environment, positively or negatively, the interaction of living beings with the environment always modifies it.

Mixed economy is a commercial exchange system that is not totally free, where the state is in charge of establishing certain norms that allow a balanced distribution of profits among the different merchants of that economic system.

Market economy, finally, is a social system where the influencing factors are the division of employment, goods and services and the interaction between the entities that make up a society. It is a free system of prices set by demand and supply. It is an absolutely free economic system, where those who intervene in the exercise of buying and selling set the conditions. There is no country today where commercial freedom is absolute.