Definitions of Economics

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The term ‘Economics’ has been derived from the Greek word ‘Oeconomicus’, which means management of the household. Thus, economics means; ‘household management’ or ‘management of household affairs’. Household management refers to managing the unlimited wants of the family members within the limited income of the family.

The beginning of the study of Economics in a systematic way was made by the Greek phosphor Aristotle during 400 B.C. and confined the study of economics up to household management, acquiring and making proper use of wealth.

Economics in the middle age came as part of moral science/philosophy. It was the time of mercantilism when economics was the belief that money was wealth and for such, accumulation of gold and silver was the key to prosperity. It means, if one country had more gold than others, it was necessarily better off. Thus, according to them, accumulating gold and silver was the key to success.

The Economists of the 18th century developed economics as a new social science. With the publication of the famous book “An Inquiry into the Nature and Causes of Wealth of Nations” by Adam Smith (1723-1790), economics got its space as an independent and developed discipline. Therefore, as an honor, Adam Smith is known as the Father of Economics. Before him, economics was considered as part of other social sciences, part of ethics, part of political science.

The following section presents the brief development of economics:

Classical Period (1776 A.D. – 1890 A.D.)

It is the first modern school of economic thought. The leader of this school of thought is Adam Smith and other important followers are J.B. Say, J.S. Mill, Malthus, David Ricardo, F.A. Walker, etc. The classical school of economic thought considered economics as the science of wealth.

Neo-classical Period (1890 A.D. – 1932 A.D.)

This period is the most fertile period of economics as many new theories were developed, redefined, and reformulated during this period. The leader of this school of thought is Afraid Marshal and other followers are A.C. Pigou, Fisher, Carl Menger, Edwin Cannan, etc. They extended the matter of economics from wealth accumulation to welfare and satisfaction.

Modern Period (1932 A.D. – onward)

The era of the 20th century in the history of economics is known as the modern period. This is the time period in which many economic theories have been contributing in a scientific way. The famous economists of this school of thought are Lionel Robbins, John Maynard Keynes, Paul Samuelson, etc. This school of thought changes the focus of the study of economics from the welfare approach to the study of scarcity and choice.

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