Evolution of economic

The term economics is derived from two words of greek language, namely,oikos(household) and nemein(to manage), meaning hereby household management. It is used to be called as political economy.INDIAN STATESMAN,CHANAKYA OR KAUTILYA IN HIS FAMOUS BOOK , “ARTH-SHASTRA”HAS EXAMINED BOTH KIND OF ACTIVITIES economic and political. Great greek philosopher aristotle had used the term economics to mean the management of the family and the state.The term economics was first of all used by

•Dr. Alfred marshall in 1890 in his famous book “principle of economics”. Economists like prof. Schumpeter,k.E. Boulding etc. Have given it the name of economic analysis. Adam smith was founder of modern economics. His famous book “an equiry into the nature and causes of wealth of nations” was published in 1776.

Classical Economists:till The End Of The 18 Th And 19 Th Century(1776-1850), Several Economists Like David Ricardo, Malthus, J.B.Say Etc. Had Fully Supported The Thoughts Of Adam Smith.

Neo-classical Economics:- From The Middle Of The 19 Th Century To The First Three Of The 20 Th Century (1850-1930) Economists Like Menger, Walras, Cournot, Marshall, Pigou Etc. Had Made Significant Contributions Of The Development Of The Study Of Economics Were Great Mathematicians. Making Use Of The Principles Of Mathematics, The Technique They Adopted To Analyse Economic Problems Is Popularly Known As Mariginal Economic Analyis.These Economists Are Known As Neo-classical Economics.

in 1933, prof. Ragnar frisch, the famous economists of Oslo university, Norway,divide the study of economics into two parts:-

•micro economics(price theory)

•macro economics(theory of income and employment).

development of macro economics took place after publication in 1936 of the well known book, “the general theory of employment, interest and money” by Lord J.M. Keynes. follower of the philosophy of lord J.M.Keynes, such as Hansen and Hicks etc. are popularly called keynesian economists. in the post-world war –ii era, several economists like Paul. A. Samuelson, K.E. Boulding, Friedman, Patinkin etc.have modified and re-formulated keynesian economics and neo-classical theories. the economists of this era are referred to as post-keynesian economics.

DEFINITION OF ECONOMICS

•Economics is the study of those activities of human being which are concerned with satisfaction of unlimited wants by utilizing limited resources.

•In the words of Seligman, “ Economics has suffered more than any discipline from the malaise of polemics and definitions.”

•In this respect, Barbara Wotton's remark, “whenever six economists gather there are seven opinions.”

4. MICROECONOMICS V/S MACROECONOMICS

The term microeconomics is derived from the greek word “mikros”, meaning “small” and the term “macros” meaning “large or aggregate economy as a whole.” Thus micro economics related to the study of individual economic units while the latter is a study

of the study of the economy as a whole.

5. Factor of production and factors and income

Factor of production

To bring order and manageability to any discussion about resources, economists classify them into four groups: labor, capital, land, and entrepreneurship.

Labor includes all human effort, both physical and mental, going into the production of goods and services.

Capital includes warehouses, machinery and equipment, computers, office furniture, and all other goods that are used in the production of goods and services.

Land includes all inputs into production that originate in nature and are not human-made – oil, iron ore and fertile soil to name a few.

Entrepreneurship is the function of organizing or bringing other factors together and taking the risk of success or failure.

Producers transform factors of production that they get from resource owners into goods and services to satisfy society’s wants and needs.

Factors and income

People who own resources provide them for production because they expect a return. Most often people expect to be paid, or to receive an income, there are different types of income:

Wages – income for labor,

Interest – income for capital,

Rent – income for land resources,

Profit – income for carrying out the entrepreneurial function.

Date: 2014-12-21; view: 997