The Economy & You #24: The Scope of Economics
When people first begin to study economics, they are surprised by the diverse fields of study that encompass economics. Many people think economics teaches them about how to run a business, or how to invest in the stock market. Some others believe that economics deals with inflation, unemployment, or even how the government manages (or mismanages) its money. While economics does deal with all of these subjects these are just small parts of the field of economics.
Economics is divided into two main categories; microeconomics and macroeconomics. These two categories are what students predominantly study in college. Microeconomics is the division of economics which examines the behavior of individual firms and households and how they function. Microeconomics helps to explain why individual businesses decide to produce a certain amount of goods and why households purchase certain goods and services. Examining and understanding individual economic decisions is what makes up the study of microeconomics.
Macroeconomics examines economic behavior on an aggregate or national scale. Macroeconomics looks at an entire industry or country as opposed to an individual company or household. Unemployment, gross domestic product, and inflation are topics covered in macroeconomics. Macroeconomics would research how many people are employed while microeconomics would examine whether an individual company should hire one more worker.
Still, these are just the two main divisions of economics. Individual economists can focus their efforts and research in a variety of areas. Economic Thought studies the development of economic theories over time including the writings of Adam Smith, Karl Marx, John Maynard Keynes, and Milton Friedman to name a few. International economics studies trade flows between nations and international financial institutions. Public Economics studies the role of government in the economy. Econometrics uses statistical data and techniques to test theories and hypotheses.
These are just a few economic fields of study. Economics studies history, finance, labor, law, the environment, race and gender . . . . the possibilities are almost limitless. It is my intention to focus primarily on macroeconomic topics as they have the most relevance to our state and its economy. As I have said before my posts should not be considered a comprehensive examination of economic issue, but a general summary of economic concepts to help encourage thought and discussion.