The economy is a science, responsible for the study of factors of production. Analyze the correct distribution of resources necessary for the existence of societies.
The different areas of the economy allow us to analyze different areas of the productive apparatus, from small and large companies to the stability of a country, its development and growth. Always looking for the best distribution of physical and monetary resources in improving social welfare.
The economy is transcendental because as social science, it analyzes the production, consumption and distribution of goods and services.
Between the scope and the implications of the economy as an area of human knowledge we have:
- As a social science, it seeks to know the bases of human needs, linked to the scarcity and distribution of resources.
- It seeks the best use of limited resources, their production, distribution and reuse.
- The economy proposes principles, theories and models to improve production agents.
- It fixes the prices of goods and services, their requirements and offers.
- Analyze the imbalances in the production systems.
- It allows to project scenarios and proposes solutions to problems of resource allocation.
- In support of mathematics, model processes, systems or situations, seeking to maximize benefits.
- Applies models to analyze the finances (money movements) of people, companies and governments.
As we can appreciate the implications and scope of the economy is very broad. Even our day to day, our style of way is linked to the management of the economy.
The five Areas of the Economy
As a social science, economics is linked to various disciplines such as law, administration, finance, mathematics, accounting; since their methodologies, models and tools take foundation and apply in many of these areas of knowledge.
Models derived from the economy can be applied to many fields. While there are many issues derived from the economy, five fundamental areas can be identified depending on the object or scope of the economic problem analyzed. These are:
The microeconomics is essential to understanding the area economy as a system.
The prefix “micro” refers to small-scale interaction and refers to households as companies that interact in the market for the consumption of goods.
Some of the most important topics in the study of microeconomics are markets, efficiency, supply and demand, opportunity cost, game theory and market failure. Everything in the business field and individuals or individual actions in a specific market.
The macroeconomics, microeconomics unlike examines a large scale, the factors involved in the administration of a country or region.
The prefix “macro” refers to great interactions. Some of the topics analyzed are inflation, GDP (gross domestic product), pricing, savings and investment, market growth, development, unemployment and how these factors affect the quality of life in a country.
The area of international economics analyzes the flow of goods and services between nations, as well as transactions between international markets or government.
The international economy has scope for international banking, currency exchange rates, tariffs and the effects of different economic and governmental systems.
Among the most important references in the field of international economy are The World Trade Organization, the US Department of Commerce; the Department of Agriculture, the World Bank and the International Monetary Fund.
The first with headquarters in Geneva, Switzerland. The other four institutions based in the United States in which there are thousands of statistics, studies and official reports on international economics and macroeconomics.
The financial economy, as a branch of the economy, emphasizes the economic analysis applied to the functioning of financial markets.
The financial economy especially focuses on measurement and risk assessment and temporary allocation of monetary resources investment and financing options in uncertain environments. Seek efficient resource management in those environments where uncertainty predominates.
Models and Economic Theories:
Economic theories consolidate a field of economics in which their models are derived and applied to current problems.
The objective of economists to develop these theories is to require less information and generate more accurate results.
The history of economics is the field that focuses on economic theories and writings of the past. Many of today’s economic decisions are based on the theories and ideas of former economists and academics such as Adam Smith, Karl Marx and John Maynard Keynes.