Manypeople believe that economics it is all about money. The term economics can havemany different definitions. It is “the study of scarcity, the study of howpeople use resources and respond to incentives or the study of decision making”(1). In fact, economics is a social science that deals with topics such aswealth and finance but it is much more than only money. Economicsstudies how an individual, a business or any institution or organization makeimportant choices regarding the use of their resources to satisfy their wantsand needs. The study of economics involves three main factors that help todetermine how economy functions; it involves consuming, producing and the saleof goods and services.Economics is generally divided into twocategories; the first category is macroeconomics.
This category concentrates onthe economy as a whole entity. It studies the overall economy and some of thetopics studied include investments, economic growth, employment, governmentintervention and more. The second category is microeconomics. Microeconomicsfocuses on individual decisions, how these individuals make trades with othersand the different factors that may influence the demand and supply of goods andservices. When taking about economics, many peoplewonder where did economics originate? AdamSmith is identified as the father of modern economics.
“Smith was a Scottishpolitical economist and philosopher, who became famous by his influential book The Wealth of Nations (1776).(2)” However he might have been inspired by Frenchwriters who shared their ideas on how economics work. Adam Smith took some ofthese ideas and expanded them in his book, explaining how economics should workas opposed to how they were working. Withthe Wealth of Nations, Smithestablished himself as “the leading expositor of economic thought. (3)” Smith’sbook was published as a five-book series that “described the nature and causeof a nation’s prosperity (3)”. According to Smith, the pursuit of someone’s ownself-interest, the precision of labor and trade between nations it is whatdetermines the wealth of a nation. In the Wealth of Nations, Smithbegins explaining how production and exchange have a big contribution to thenational income.
He uses an example on how assigning certain tasks to differentpeople can boost the productivity to a higher level. Smith also believes thatbuilding a capital, by saving some of the goods that have been produced insteadof selling them immediately will help to have a better condition and to haveeconomic progress. ForSmith, someone who was earning money by their own labor benefits themselves butwithout knowing is also benefiting society because it is earning goods in acompetitive free market and must be producing something that others will value. Smith also published a book called The Theory of Moral Sentiments in whichhe shows that “our moral ideas and actions are product of our very nature associal creatures. (4)” This book identifies what is needed to survive onsociety and explains what it must be done. Smith argues that as individuals, itis natural to look after themselves first. That can be considered ethicallywrong, because people are looking forward to doing something that might have abenefit on them, but it doesn’t matter if this action affects others.
Ethicsstudies the values and virtues of human beings and explains how a value is agood to achieve something or if it is a standard that someone might have tofollow to achieve the good, whether it is right or wrong.In today’s economy, ethical issues have aconnection with economic issues. Investors, producers or any individual can bedoing something that it will be considered good for their company, but it mightbe morally incorrect. According to Smith, not everything related toself-interest can be considered bad, human beings might be selfish but alsohave the capacity to help others when it is needed, and this is what makespossible to “live together peacefully in the moral sphere and productively (inthe economic). (4)”For college students in general, the studyof economics will give them a background of how the economy of the countryworks and will help them to develop skills that will be useful for them in thefuture. For those who want to major on economics or any business area they willhave an even more strong background in microeconomics and macroeconomics, willhave more knowledge about economic institutions and their functions, and willacquire knowledge in different areas of this field.
Economics majors willprepare these students for careers that have to deal with banking, insuranceservices, government agencies and other organizations. It will also provide afoundation for those students who will decide to continue their educationbeyond the bachelor’s degree, will be a good preparation for students who willlike to pursue a law career and other business and social science areas.In general, every individual should knowthat it is important to care about economics. In this country we have a freemarket economy, it is a flexible and adaptable system which can vary from timeto time, but it will work with whatever the future may bring.
Economics has animpact on everyone’s lives and learning about its concepts can help youunderstand what it is happening on a day to day basis, it will help you to makebetter financial decisions, understand economic policies and see the world in adifferent perspective.