Economicsis the social science that study about human business activity such asconsumption, production, saving, exchanging and distribution of commodities.Consumption and production are the two main factors of economics. Scarcity is the central economicproblem. Human scarcity born between the existence of unlimited human wants andlimited factors of production (eg,.Land, Labour, Capatical, Technology andetc.,).
Economics can be satisfied the humanwants with limited resources. Microeconomics and Macroeconomics are two mainarea of economics.(1) MicroeconomicsMicroeconomics is the economics area that analysesindividual decision making of consumers and producers and they make marketstogether. It also studies the improvement of markets by using their behavior,the decision making through demand and supply condition, the effects of rulesand regulation and any other circumstances.
In Macroeconomic, the consumer choicesis the most important facts such as what they would like to buy, how theychoose and whom actually they would like to buy commodities.(2) MacroeconomicsMacroeconomics analysis the behavior of the economicsystem as a whole. Macroeconomics concerns with aggregates behavior like thenational incomes, the governmental taxation and subsidies gross nationalproduct (GNP), growth of nation, cyclical fluctuation, inflammation and etc., There are two sets of tools inmacroeconomic: fiscal and monetarypolicy. Macroeconomic policy achieve the economic goals of stability price,full employment and market growth by limiting the effects of the businesscycle.
(a) FiscalpolicyFiscal policy that is using revenueof government and expenditure as resources to influence the market. For example: expenditure, taxes, debt. (b) MonetarypolicyMonetary policy is processing the monetary authority of a country such as central bank, currency board or otherregulatory committee. Monetary policy is also maintained the actions such as adaptingthe interest rate, government bonds buying and selling.
Thus,Microeconomics cannot mention the economy function as a whole .Also,Macroeconomics cannot give the idea of the individual behavior of economics. Soboth Micro and Macroeconomics studying can complete the whole system ofeconomic studying. Inprimitive economics, people use their resources to fulfill their needs andwants. Likewise, a subsistence economy that depends on the nature of resourceto complement of human basic needs or wants such as the tailor’s made the dressmainly for his family own wearing. Typesof Economics(Gemma, 2014 ) Mentioned that there are four types of economics:Traditional Economic System, Command Economic System, Market Economic Systemand Mixed Economic System.a) Traditional Economic System A traditional economic system is the mosttraditional and ancient type of economy in the world.
In the traditionaleconomy, beliefs, customs, traditions, religions, socials and etc., largelydetermined economic matters. (Amadeo, 2017) Referred Traditional economies dependon agriculture, fishing, hunting, gathering or some combination of theabove. In place of Money, they are using barter . Most traditional economies operate in emerging markets and developing countries such as Africa, Asia, Latin Americaand the Middle East. Economists and anthropologists believe that traditionaleconomies started all other economics.
So, they expect remaining traditionaleconomies to develop into mixed, market, and command economies over time. b) CommandEconomic System (Harvey, 2000)Stated that in the command economy,the decisions are taken by an all-powerful planning authority. (Ericson, 2006)Indicated that the commandprinciple is likely to clash with the operation of market forces, yet a commandeconomy contain and rely on the market mechanism in some of its sectors andareas: for example, influencing labor allocation, or stimulating small-scaleprivate production of some consumables.(DePersio, 2018)Referred that thereare advantages and disadvantages in the command economy. Low levels ofinequality and unemployment are one of the advantages of command economy. Thiscan also be stable growth in economic .However, there is lack of competitionand lack of efficiency in the common economy.
There can be problems ofgathering information and inappropriate incentives.c) MarketEconomic SystemInMarket Economic System, the decision is emphasis on demand and supply. Customerchoice goods that they are willing to pay for them. The owner used theirresources in production to obtain the maximum output as possible as they can.Therefore, the price system reply on the consumers wish and allocates thecommunity’s productive resources.
Labors can also choose work wherever theywant freely. There is competitive markets responsive to consumers.However,market competition may be limited .
There can be inequity and the sellersignored the environment and other social goals.d) MixedEconomic SystemAn attempt to get the both commandand market economic system, mixed economic system are appeared .Mixed economicsystem combine the advantages of command and market economic system consistingof private sector and public sector. Practically, subjective judgments are involving many economicdecision .People cannot make objective judgments solely in economic decision.So that,the economists try to make objective decision as possible as they can.They establish principles that are showing how economy works and how can beused to predict likely policies result .As the nature of economics is the zone of economy where objectivity ends andsubjectivity begins.