1. Discuss the nature and scope of economics?
or, Economics is the study of art as well as science. -Explain the statement.
or, “Economics is the science of wealth”-Discuss.
or, ” Economics is the study of mankind in the ordinary business of life”- Discuss the statement.
or, “Economics is a science which studies behavior as a relationship between ends and scarce means which have alternative uses.” Explain the statement
or, What do you mean by Positive Economics and Normative Economics? Indicate their differences.
or, Compare the definitions of Economics offered by Adam Smith and Lionel Robbins.
or, Discuss the subject-matter of Economics.
[NB: It may be answered the above all questions are studying the content bellow. You just need to be a tricky one ]
The nature and scope of economics are related to the study of wealth or human behavior or of scarce resources. The scope is very wide and includes the subject matter of economics whether economics is a science or an art or whether it is positive or normative science.
Wealth and Welfare Connotations
Wealth and Welfare connotations are segregated into the classical view of Adam Smith and Neo Classical View of Marshall. First, Let us discuss Classical view and the relating contemporaries.
The Classical View and Contemporaries –
The Classical Economist Adam Smith defines Economics as the science of Wealth. He defines as “nature and cause of wealth of nations” whereby it “proposes to enrich people and sovereign”. The classical view is misleading and has serious defects. This view of conception of economics as a science of wealth which laid exclusive stress on material wealth. Material wealth is the object of desires of man. Wealth was considered to be the stop in itself. By stressing on the word “Material Wealth” Economist Adam Smith narrowed the scope of Economics by excluding all material activities which are related to the production of non-material goods and services such as Engineers, Accountants etc.
Now, after bearing in mind the classical view of Adam Smith, we are going to see the Neo Classical View by Economist Marshall and its Contemporaries.
Neo-Classical View and Contemporaries –
Alfred Marshall led neo-classical school which placed all the economists a reputable position among social science. He emphasized on a man’s welfare. Wealth was observed as the basis of human welfare, not stop in itself but a means to a stop. According to Marshall “Political Economy or Economics is a study of mankind in the ordinary business of life. It inspects that part of individual and social accomplishment which is most intimately associated with the achievement and with the use of the material conditions of well-being. It is on the one side a study of riches and on the other and more significant side a part of study of man. The contemporaries are it excludes activities of socially disagreeable and non-standard persons like thieves, miser’s etc. non-economic activities and activities having dishonorable ends are excluded from the study of economics.
Scarcity Definition of Robbins
According to Robbins, “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” It was Lord Robbins, who exposed the rational discrepancy and insufficiency of other economists’ definitions.
Growth Oriented Definition
Modern Age is the age of economic development. Its key purpose is to enhance social well-being and progress the standard of living of the people by getting rid of poverty, redundancy, disparity of income and wealth, malnutrition etc. of the realm. Hence the financial development is the essential point of all economic policies.
Scope of Economics
The continuous growth in the subject matter of economics has led to divergent views about a scope of economics. It includes Subject matter of Economics, Economics is a science or an Art, or is it a Positive or Normative science.
Subject Matter of Economics
The subject matter of economics is the study of grounds of material interests or as the science of wealth. Men who are sensible beings and take action under the active social, legal and institutional group. It eliminates the performance, manners of socially objectionable and uncharacteristic persons like misers, thieves etc. It consists of the study of the exertion of consumption, production, exchange and distribution of wealth, as well as the fortitude of the values of goods and services the amount of employment and the determinants of fiscal development. Further it comprises the study of grounds of poverty, unemployment, under employment, inflation etc. and actions for their elimination.
Economics as a Science
Economics is a science since its laws have widespread soundness such as the law of diminishing returns, the law of diminishing marginal utility, the law of demand etc. It is called as a science since its self-remedial nature. It goes on amendments in the dawn of new specifics based on interpretations. Hence Economics is a science like any other science that has its own generalizations, theories or laws of economics which traces out a causal relationship between two or more phenomena.
Economics as an Art
The practical application of scientific techniques is the Art of Economics. Some economists consider economics as a science and art while few others as science and applied science. It is considered as newest of science and oldest of arts and the queen of all the social sciences.
Economics as a Positive Science
As per the nineteenth century experts, economics is a positive science. Since it seeks to explain what has actually happened but not what is ought to happen. According to J.N.Keynes, Positive science is defined as “A body of systematized knowledge concerning what ought to be and concerned with the ideal as distinguished from the actual.”
With contrast to the Positive Science, Normative Science deals with the “what is ought to happen” cases. That is predictions of future economic development with regards to the present conditions are discussed in this. The postulations on which economic laws, theories or principles are based relate to man and his problems. If we attempt to test and forecast fiscal actions on their basis the subjectivity elements always penetrates. Therefore, the laws of economics are at best propensities.
Economics is concerned with human well-being as well as ethical values. It is science and an art, since the scientific principles are applied practically. It is both positive and normative science since the actual happening and the future happenings are dealt. Hence the scope and nature of economics deals in with all the above as explained by the economists.
(You may be answered of the first question is bellow also which you will seem to better.)
[Ans: Economics is a social science which deals with human wants and their satisfaction. It is mainly concerned with the way in which a society chooses to employ its scarce resources which have alternative uses, of the production of goods for present and future consumption. Political economy is another name or economics. “Polis” in Greek means a State. The early writers used ta term “Political Economy” for the management of the State. The existence of human wants is the starting point of all economic activity in the world. Unless we make efforts, we cannot satisfy wants. But soon, new wants appear. But all our wants cannot be satisfied because means are limited. We study economics because there is scarcity of many goods we want. This problem is common to the individual as well as the State. Our wants are unlimited but means are limited. This leads to choice making. If there is unlimited supply of goods which satisfy our wants, the problem of choice will not arise. Modern economy is a monetary economy. Prices are paid in money. So money plays an important role in the economic life of a society. We shall now sum up discussion about the nature of. Economics is a social science which studies human wants and their satisfaction. Human wants are unlimited. ]
2. Examine Marshall’s definition of economics? Alfred Marshall’s Definition (welfare Definition)
Alfred Marshall (1842-1924) wrote a book Principles of Economics in 1890. In it, he defined economics as “a study of mankind in the ordinary business of life”. An altered form of this definition is: “Economics is a study of man’s actions in the ordinary business of life”.
Marshall agrees that economics studies about wealth. But he does not accept the view that economics studies about wealth alone. In the words of Marshall, “Economics is on the one side a study of wealth, and on the other and more important side, a part of the study of man. In economics, we do not study about all aspects of humankind. As cairn cross puts it, economics studies about man as “buyer and seller, producer and consumer, saver and investor, employer and worker”. Marshall’s definition is known as material welfare definition of economics because of its emphasis on welfare.
There is no doubt that Marshall’s definition is a great improvement over the definition of Adam Smith. For its emphasis is on social problems. And economics is a social science. Moreover, it tells us about the link between wealth and welfare.
First, if we go by the definition of Marshall, in economics we should consider only those activities which promote material welfare. But many activities do not promote welfare but are rightly considered as economic activity.
Second, some activities promote welfare but not material welfare. For example, the activities‟ of doctors, lawyers, actors, musicians promote our welfare. But their lab our does not result in the production of material goods. If we follow the material welfare definition of economics, we cannot consider the activities of the above categories of labor as economic activity as they do not promote material welfare.
Third, Marshall’s definition is classificatory. It is not analytical. It considers the production of material goods (e.g. Charis, tables, cycles and cars, bread) alone as economic activity.
Lastly, by introducing ethical concepts like welfare, economics will become an inexact science. For it is rather difficult to measure welfare. In spite of the above criticism against Marshall’s definition, we should not forget Marshall has widened the scope of economics by establishing a link between wealth and man and his welfare. Modern definitions of economics are based on a theory of scarcity and choice
3. Discuss the importance of the study of Economics.
or, What is the importance of the study of Economics from the point of view of an ordinary citizen in general and a banker in particular?
The importance of the study of Economics from the point of view of an ordinary citizen in general and a banker in particular are discussed bellow:
Economics helps individuals and businesses to make informed decisions in different fields, including finance, governance, law, administration, and finance among others. Typically, all people in the society are affected by economics in one way or another. It is not only important in education but also in making critical analysis in different situations.
Being aware of the current economic situation is vital in buying and selling. People tend to talk how economics affect them as buyers, sellers, investors, workers, producers, consumers among others. Therefore, economics gives people the knowledge to understand and interpret different situations, thus, giving them an idea of how certain events will affect them. A country with a population with good economics literacy will benefit from critical analysis on different events that affect the economic situation of a particular country. This allows the country to get a clear approach on how to solve some problems.
General knowledge on economics provides a person with intellectual skills on opportunity costs, allocation of resources and critical evaluation of projects. It also enables consumers to have a good understanding of the market. Studying economics also helps many people to get jobs in different places, including banks, law firms, accounting firms, share brokers, government among others. It provides graduates with different job opportunities.
Conclusion: Economics is the study of how societies, governments, businesses, households, and individuals allocate their scarce resources.
It helps us for advising on economic issues, formulating policies at the Bank, and analyzing economic conditions for investment banks as well as persons, brokerage houses, real estate companies, and other private sector business. By studying economics also contribute to development of many other public policies including health care, welfare, and school reform and efforts to reduce inequality, pollution and crime.
The study of economics can also provide valuable knowledge for making decisions in everyday life. It offers a tool with which to approach questions about the desirability of a particular financial investment opportunity.
4. Discuss the importance of the study of Economics laws.
Like other social sciences, economics has its own laws. A law a statement of what must happen given certain conditions. Every cause has a tendency to produce some result. For example, in physics, we study that things fall to the ground because of gravitation. The law of gravitation is a statement of tendency. Similarly, the laws of economics are statement of tendency. For example, according to the law of demand, when there is a tendency among people to buy more expand. It means that there is a tendency buy more than among people to then there is fall in the people to buy more when there is fall in the price of a good. Similarly, if price rises, they will buy less. Laws operate under certain conditions. If these conditions change, they will not operate. This is applicable to all science.
We may broadly classify sciences into physical science and social sciences. Physics and chemistry are example of physical sciences. Economics, politics are example of social sciences. The laws of physical sciences are exact.
As economies deals with man and his behavior, its laws are complex and inexact. That is why Marshall has said that “the laws of economics are to be compared with the laws of tides rather than who the simple and exact law of gravitation.” The science of tides explain the simple the rise and fall under the influence of the sun and the Moon probably there will be high idea on a full moon night. Similarly, economics.
5. Explain the relationship of Economics with others such as (i) Sociology (ii) Political Science (iii) Statistics
Economics is closely related to the other social sciences, particularly politics, sociology (because some academics argue that economics is in fact a branch of sociology) and ethics; there are also strong connections with psychology, as economics is often influenced and affected by human behavior patterns. Economic thought dates back to ancient Athens with Plato and Aristotle both describing fledgling economic models in their writings.
Sociology, which is the study of human social behavior, can have a quantifiable effect on the application of economics in many ways. Stock market prices, for example, are often influenced much more by the perceptions of investors and shareholders than by actual hard data. Understanding what drives human behavior can lead to a better prepared economic model, and can also mean markets can be tailored around specific patterns of behavior.
Politics and economics are more visibly connected, thanks to the inseparable link between the science of state and the health of the economy. Interestingly, there is much debate about the level of agreement academic economists have with political economic decisions, due to the often long time scales needed to effect and alter economic models, which is often at odds with the need for quick political fixes.
Statistics are a methodology necessary in the field of statistics and are used to collect, analyze and evaluate data. Economics depends heavily on the use of statistics. It is difficult to drop a distinction between statistics and economics.
Economics is defined as the study of how people behave with regard to the production and consumption of goods. As a social science, economics attempts to describe trends in consumer markets, such as wealth acquisition and transfer. There are two forms of economics:
Macroeconomics: analysis of large-scale economic activity, such as within a country or international market
Microeconomics: analysis of small-scale economic activity, such as between individuals and corporations
There are various themes studied within both forms of economics, including costs, production, consumption, and the rationales behind individual, corporate, national and international trade. In order to develop hypotheses around the various topic areas, economists make use of statistics and are able to compare information. Economic statistics involve quantitative data that describe either past or present trends. The data may be presented in various ways:
Time-related: to show trends and changes that occurred across a specific period of time, for example, unemployment rates or housing costs during a 10-year period
Cross-section: to show trends and changes within a specific period of time, for example, job statistics for current year college graduates
Economic statistical data sets include information about measurement, sample sizes, collection procedures and analysis processes. The data are often published for public use, such as through the United States Census or for private use, such as intra-company data used for decision-making.
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