Meaning of Economics: Purpose, Field and Principles

Definition of Economics – Economics as a science that studies the use of limited natural resources in the fulfillment of unlimited human needs. Economics is also a science that studies human efforts in achieving prosperity. See a more complete explanation of Economics starting from its Definition, Purpose, Areas and Principles as follows:

A. Understanding of Economics

Economics is the science that examines market financial behavior ranging from interest rates, exchange rates, business cycles, international trade, government policies to the efficiency of natural resource use which you can learn in the book Introduction to Economics below.

Economics also studies the income of individuals, companies, countries and stock prices to the imbalance of the economy. By studying economics will help a person in understanding how the economic behavior of a certain society, give input in decision-making, give an understanding of the potential and limitations of the economic policy taken, to increase human sensitivity to various economic and global problems.

Here are other definitions of Economics according to experts:

1. Alfred Marshall

Through his book entitled The Principle of Economics, Alfred Marshall thinks that economics is a science that studies human actions both individually and collectively and their connection in the use of material goods.

2. HJ Davenport

In the book “Economics of Enterprise” , HJ Davenport reveals economics as a Science that handles various problems from the point of departure of prices. Economics is also a tool that studies how the level of production can be increased so that the standard of living of the community will automatically increase as well.

3. M. Manullang

According to M. Manullang, economics is a science that studies how to meet the desires of people or society in order to achieve prosperity or conditions where people can meet their needs, both in the form of goods and services.

4. Oscar Langen

Economics according to Oscar Langen is a science that studies the administration of various resources, both small and large resources, which are then analyzed so that they can be reused for human life to the maximum and best.

5. John Stuart Mill

According to John Stuart Mill, economics studies the various intricacies of billing and production. Not only that, according to Stuart, economics also discusses various production and wealth distribution activities.

6. Prof. PA Samuelson

In the book Economics: An Introductory Analysis Prof. PA Samuelson explained that economics is a study that studies how people make choices by using limited resources which are then further processed to produce various types of goods and services to then be distributed again to various levels of society.

7. Louis Cantori

According to Louis Cantori, economics viewed from an Islamic point of view is economics based on various Islamic rules. For example, about the problem that guarantees the rotation of property owned by an individual.

8. Suherman Rosyidi

Suherman Rosyidi as a Philosopher of Indonesian origin thinks that economics is a branch of science that provides an understanding of the symptoms that arise in the community in its efforts to meet the needs of life or its efforts to achieve prosperity.

9. Adam Smith

Often referred to as classical economic theory. According to Adam Smith Economics as a branch of science that studies human behavior in its efforts to allocate various limited resources to achieve certain goals..

10. Mankiw

Mankiw believes that a person who masters Economics will improve his understanding of the various potentials and limitations of economic policy. Economics also studies how an individual then interacts with each other.

B, Branches of Economics

Economics as a science that studies various human activities in order to meet all the needs of life. In order to achieve this prosperity, humans will then perform economic activities such as consumption, production, and distribution. This will then give rise to various economic problems, namely the imbalance of unlimited human needs with the increasingly limited amount of goods or production. Here are some divisions of the types of economics that you need to know:

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1. Applied Economics

Applied economics is a field of economic science that applies economic theory and principles in real situations to predict possible outcomes that focus on the practical use of economic science, especially for individuals in decision-making, policies, guidelines, or certain standards with the aim of overcoming problems that occur. Economics usually uses case studies and statistics. For example in the sphere of enterprise, monetary economy, and banking.

Monetary Economics is a part of economics that is used to study the nature, function, and influence of money in economic activities that you can learn in the book Monetary Economics: Indonesian Case Study.

2. Descriptive Economics

Descriptive economics is an economic science that describes the state of the economy in society at that time. Descriptive economics itself displays data from various facts and phenomena that occur. Economics examines various images, and conditions of the economy. The data collected is variable and can be in the form of numbers, graphics, curves, or other forms of presentation that you can understand the meaning of in the Descriptive Statistics book: Vivi Silvia.

In Indonesia, this economic science is then used by BPS (Badan Pusat Statistik) to provide an overview of the Indonesian economic conditions both macro and micro. The application of this economic knowledge was also used when dissecting the monetary crisis that occurred in Indonesia in 1998.

3. Macro Economics

4. Microeconomics

Microeconomics is an economic science that studies things that are limited to an economic activity only. Including the base price and the highest price that needs to be set in order to maintain a balance between demand and supply. Because if there is a monopolist in the market then it will narrow the business opportunities of new players, so that the entrepreneurial spirit of the community will also decrease.

Microeconomics also discusses various aspects of individuals such as the behavior of buyers or consumers as well as the behavior of individual producers. You can learn this in the book Micro Economics An Introduction.

5. Public Economics

As in the example of the function of the government through the point of view of the micro economy in the book Public Economy by Bambang Suprayitno.

6. Monetary Economics

This knowledge also helps in the implementation of a country’s monetary policy. This knowledge studies a policy issued by the government to regulate the financial stability of a country. Monetary Economics also learns about money, banking, and various other financial institutions. Aspects studied range from inflation, the amount of money in circulation, and bank interest rates.

It can be concluded that monetary economics talks about how money works which you can learn through the book Monetary Economics: Indonesian Case Study.

7. Economics of Human Resources

Human Resource Economics (HR) is an economic science that studies labor production factors, starting from job opportunities, labor quality, and wage determination. Its scope ranges from population dynamics, employment, employment structure, informal-formal sector, population transition, population mobility and migration, labor demand and supply, child labor, workforce planning and population and economic development.

The Economics of Human Resources book: In the Perspective of Development below can be used as a reference for those of you who want to learn more about economics.

8. International Economics

International economics is an economic science that studies the occurrence of economic activities between countries, for example at the World Trade Organization (WTO); International Monetary Fund (IMF); and the United Nations Conference on Trade and Development (UNCTAD).

This knowledge also has an important role in the international business cycle. In addition, the theory of the international economy itself is progressing and developing according to the book International Economy by Mahyus Ekananda.

Matters studied in international economics ranging from international trade, international balance of payments and international trade balance. Economics which will then also examine various international political events. Economic activity, and current economic problems, whether it is the latest developments regarding Brexit proposed by the United Kingdom from the European Union or the latest tariff changes in the United States. This discipline also brings together various principles and approaches of macroeconomics and microeconomics.

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9. Regional Economic Science

Regional economics is an economic science that studies the economic interaction between a region and its development with the aim of increasing the level of the economy in a region. Regional economic knowledge itself can also be used as a medium that will help the regional government to analyze the economic problems that occur and then make policies as a solution.

You can learn the theory and practice in economics through the book Regional Economics Theory and Practice by Mudrajad Kuncoro.

10. Industrial Economics

Some topics related to economics such as market structure, market competition behavior, monopolies-oligopolies can be learned in the book Industrial Economics by Muhammad Teguh.

12. Economics of Natural Resources

Economics that studies the problem and allocation of natural resources optimally viewed from an economic point of view covering positive and negative externalities.

C. Field of Economics

Economics is divided into two by Samuelson and Nordhaus, namely microeconomics and macroeconomics. Microeconomics is an economy that studies the behavior of companies and their consumers, as well as their relationship in determining prices and goods or services to be traded, and the quantity of input factors.

Some aspects of analysis in microeconomics include Benefit Analysis, Cost Analysis, Supply Theory, Demand Theory, Elasticity, Production Theory, Price Theory. The scope of this economy examines more about producers and consumers. In addition, microeconomics also plays a role in making policies that are used as a foundation in planning various company policies in the management of their resources, for example price and wage management.

While according to Mankiw (2014), microeconomics is a science that studies how households and companies make decisions and are able to interact in the market. Samuelson and Nordhaus (2010) explained that macroeconomics first appeared when the revolution titled “General Theory of Employment, Interest and Money” by John Maynard Keynes was published, the theory discussed the impact of the business cycle with high levels of unemployment and inflation. Macro economics helps in determining consumption and total investment, which is how banks then manage their customers’ money and interest.

D. Principles of Economics

The principle of economic science is used as a guide to achieve a rational comparison between the sacrifice and the result or in other words get the biggest profit with the smallest sacrifice, or with a certain sacrifice and then get the maximum possible result, the economic principle will also make a person minimize the loss that he suffering Here is a breakdown of the principles of economics that you need to know:

1. Economic Principles in Production Activities

2. Economic Principles in Distribution Activities

3. Economic Principles in Consumption Activities

E. Economic Theory and Model

In economics, economic law is a cause-and-effect relationship between various economic activities that are interconnected, for example the law of demand and supply. Economic theory is also used as a basic summary as well as used as a basis for the implementation of various economic policies.

It is these theories that then eventually form an economic model that helps explain an economic event. One example of the economic model itself is on the production curve that produces various concepts of diminishing returns and opportunity costs that can be applied.

Economic method as a procedure taken to achieve certain goals is generally used to solve various economic problems based on certain theories. An example is in the decision-making method with deductive and inductive methods (decision-making based on data collected from the reality of human life.

The reality is then experienced by families, individuals, and local communities. This reality is also studied to find efforts to fulfill needs) Meanwhile, the deductive method works on the basis of provisions, laws, or general principles that have been previously tested for truth. This method determines the steps for solving problems in accordance with the principles, principles, laws, and provisions that apply in economics.

Actions, Motives, and Economic Principles.

Economic action refers to every human step to meet his needs. This includes production, consumption, and distribution, while the economic motive is the force that moves people to perform economic actions.

Not only that in the economic cycle, of course there are also economic principles that are used as thinking to achieve certain goals with the least possible sacrifice. So much information about Economics Starting from the Definition, Purpose, Field to the Principles. Hope it’s useful!