Economics (/ˌɛkəˈnɒmɪks,ˌiːkə-/ )[1] is a social science that studies the production, distribution, and consumption of goods and services.[2][3]
Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes what's viewed as basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyzes the economy as a system where production, consumption, saving, and investment interact, and factors affecting it: employment of the resources of labour, capital, and land, currency inflation, economic growth, and public policies that have impact on these elements.
Other broad distinctions within economics include those between positive economics, describing "what is", and normative economics, advocating "what ought to be";[4] between economic theory and applied economics; between rational and behavioural economics; and between mainstream economics and heterodox economics.[5]
Economic analysis can be applied throughout society, including business,[6] finance, cybersecurity,[7] health care,[8] engineering[9] and government.[10] It is also applied to such diverse subjects as crime,[11] education,[12] the family,[13] feminism,[14] law,[15] philosophy,[16] politics, religion,[17] social institutions, war,[18] science[19] and the environment.[20]
The earlier term for the discipline was 'political economy', but since the late 19th century, it has commonly been called 'economics'.[21] The term is ultimately derived from Ancient Greek οἰκονομία (oikonomia) which is a term for the "way (nomos) to run a household (oikos)", or in other words the know-how of an οἰκονομικός (oikonomikos), or "household or homestead manager". Derived terms such as "economy" can therefore often mean "frugal" or "thrifty".[22][23][24][25] By extension then, "political economy" was the way to manage a polis or state.
There are a variety of modern definitions of economics; some reflect evolving views of the subject or different views among economists.[26][27] Scottish philosopher Adam Smith (1776) defined what was then called political economy as "an inquiry into the nature and causes of the wealth of nations", in particular as: