What Are Five Areas of Economics?
Economics is a social science which analyzes the production, consumption and distribution of goods and services. Economics attempts to explain how economies and economic agents work, and applies models in order to analyze primarily business finance, and government. However, the models derived through economics may be applied to many other things such as crime, law, politics and education. While there are endless subtopics of economics, there are five main areas which will be a factor in the analysis of any subtopic.
Microeconomics is the most essential in understanding the economy as a system. The prefix "micro-" refers to small-scale interaction and refers to households as firms interacting in the market for consumption of goods. Some of the most vital topics in the study of microeconomics are markets, efficiency, supply and demand, opportunity cost, game theory and market failure.
Macroeconomics, unlike microeconomics, examines the economy as a whole. The prefix "macro-" refers to large-scale interactions. Some topics included in macroeconomics are inflation, GDP (gross domestic product), pricing, savings and investment, market growth, development, unemployment and competition.
International economics analyzes the flow of goods and services between nations. International economics is concerned with international banking, monetary exchange rates, tariffs and the effects of different economic and governmental systems.
Economic theory is the field in which the models are derived and applied to current problems. The goal of economists in developing theories is that they require less information and lead to more accurate results. In microeconomics, many theories include supply and demand, opportunity costs, marginality and game theory. In macroeconomics, theories include money supply, monetary theory of inflation and the quantity theory of money.
Economic history is the field which focuses on economic theories and writings of the past. Many decisions of today are made based on the theories and ideas of former economists and scholars such as Adam Smith, Karl Marx and John Maynard Keynes.