What is Economy – A New Definition?
What is economics? The subject may be said to be the study of how people, institutions or firms choose to allocate their resources or attempt to maximize their potential. In simple terms, it is a field of inquiry into how people in the market react to external demands for goods and services. This type of market research seeks to provide insight on the allocation of scarce goods and opportunities within the market. It also attempts to provide knowledge on the nature and characteristics of choices.
The analysis of economic decision-making within ECONOMY can be divided into two main sub-topics. First, there is the domestic economy of a country which is the micro-economic activity of individuals and families within a country. A micro economy can be explained simply as any local activity that does not have major global-wide effects. For example, a family in a rural area that engages in farming and other micro-economic activities may not be affected by changes in international agricultural prices or foreign trade policies.
A second sub-topic of economics is the international economy. International economies include all the economies of nations other than one’s own. The analysis of these economies is sometimes referred to as world economics. Unlike micro-economies, world economies are extremely complex and have far reaching effects on national economies. As such, they are much more difficult to study in a comprehensive manner.
There has been much debate among economists over the years as to what factors affect the performance of economies. Many people question the accuracy and usefulness of economic data and theories. Most economists disagree with the contention that there is a single main economic theory that can explain the successes and failures of all economies. Rather, each economy operates in its own fashion, guided by its own unique set of circumstances.
In an alternative view of economics, individual economic decisions are made by entrepreneurs within the framework of a free-market economy. The same general economic laws that guide free-market economies cause this theory to work. These include the ability of a business to make profits. The size and number of businesses also play a part in the operation of the economy. In a command economy, the government controls all aspects of a business so that the businesses cannot engage in risky or inefficient practices.
As more information about the workings of free-market economies comes into focus, it becomes clear that the United States is not a unified economic entity. Each state’s unique attributes are shaped by the unique circumstances of that state. In short, the United States is a country of rich individual freedom and mixed economies. This, in turn, provides the United States with a range of differing economic growth patterns and environments. In short, no single economic model works for all states in the union.