Witheach passing day, countless things and facts have changed prominently in this developingworld. For instances, the culture and traditions, technology, human behaviors,ways of living, people’s values and preference. No matter how fast things havechanged, the daily basic needs of human being are always the same. Back in olddays where no advanced technology is available yet, the ancient human races survivedby growing plantations, hunting, fishing and living in the caves or shelters.
They consumed what they produced and then later, their own stock was exchangedwith other people for different item when money was not in place yet. This ishow the behavior or culture called “Trading” developed and later followed by theword “Economy” which is related to each individual and the wholecommunity/country. Thereare many researchers or Economists worldwide who have been analyzing aboutEconomics. (association, 2018) Its definition canvary in different ways. Most of their studies highlight the scarcity, howpeople utilize resources and respond to incentives, or how and why people makeeconomic decisions.
It often includes topics like finance and wealth althoughit is not all about money. Economic is a wider discipline that helps peopleunderstand historical trends, understand recent headlines, and make economic predictionsabout upcoming years. Nature of Economics study is widely debated as Science orArt. If science, whether positive or normative. (Seth, 2018) Scienceis a systematic and logical approach of knowledge and fact which progresses thecorrelation-ship between causes and effects.
Economic is somewhat considered as Science because it has thenecessary features of not only collection of facts, but all the facts aresystematically collected, classified and analyzed by using systemic and scientific methods. (Fontinelle, 2018) It seems like it is simple todifferentiate between positive and normative economics but it is not an easycase. Positiveeconomics study is based on objective analysis and facts while normative is judgedby subjective and value based. (unknown, 2017) If it can be tested and proven (or disproven) withoutcarrying a value judgement, it is a positive statement.
Normative economics isbased on personal values and opinions.Economicis also considered as Social Science or Art. Sciencegives us principles of discipline however, art makes all the principles intoreality. Therefore, considering economic activities, it can also be claimed asan art, because it gives guidance to the solutions of the economic problems andit contains studying and prediction of human behaviors.
SinceEconomics is a driving concept of human interaction, studying it often revealswhy people and governments behave in certain ways. Therefore, depending on researches, we can conclude thateconomics is neither a science nor an art only. But, it is a golden combinationof both. Science and art are complementary to each other. Hence, economics isconsidered as both a science as well as Art.(GIBSON, 2014)Generally, there aretwo major economic disciplines, Microeconomics and Macroeconomics.
Microeconomics studyfocus on an individual, group or company level. Macroeconomics, on the otherhand, is the study of a national economy as a whole. (Pettinger, 2017) A few examples of Microeconomics issuesare demand and supply, wages, poverty.
Macroeconomics focus the issues likeinflation, unemployment, GDP, economic growth and recessions. Economists utilizedifferent economics models for various purposes to relate the current economicsituation- causes and effects on the future economy and to justify policies atpolitical, organizational and households. (unknown, www.marketbusinessnews.
com, unavailable) The description of a model could be inthe form of figures, words, diagrams, or equations, depending on the audienceand the point of the model. (francis, unavailable) One of the majorEconomic concern is Scarcity, the shortage of a factor or product in market. The law of demand and supply is most commonly usedeconomic model, the classicalmodel. It states that while other factors remain unchanged, the demandof a product or factor will increase when the price has decreased.
The law ofsupply explains, with other factors remain the same, an increase in price will causein an increase in the quantity of the product or service that is supplied tothe market. (francis J. , unavailable) Fig 1 recapitulatesthe law of demand and supply. fig 1 (www.intelligenteconomist.
com, 2017) Due to higher priceand supply rate than demand, the price will drop until it reaches the equilibrium.That is the point where there are no more changes and the demand equals to thequantity supplied. This case is same for resources like raw materials, labor andcapital.(unavailable, unknown) Economists occasionally extricate between’positive’ and ‘normative’ economics.
Positive economics is related to thedevelopment and testing of positive statements that are objective andverifiable. Normative statements derive from an opinion or a point of view. Thevalidity of normative statements can never be tested while positive, on thecontrary, can be tested, at least in theory, if not always in practice. Economicsystems are widely manipulated by policies, environmental and institutionalfactors. (DANIEL HIRSCHMAN AND ELIZABETH POPP BERMAN, 2015) Economists possess themost policy influence of any group of social scientists. In United States,economics is the only social science that controls the major area of governmentpolicy. Economists are somewhat important in public policy,even though policymakers often ignore their advices.
(Richards, n.d.) Type of market systems can varydepending on each country’s government policy. Free market system providesperfect competition for buyers and sellers while Command system is the exactopposite to it. US, UK, Singapore and some European countries has been using freemarket system and it suits them well.
(unknown, www.investopedia.com, unknown) In Command system, Governmentcontrols the decision on production, selling and the price of the goods. It isa crucial feature of any communist society like Cuba, North Korea and OldSoviet Union. China applied command system for decades before transforming to Mixedeconomic system which represent both socialism and capitalism. Fig 2 (a) and 2(b)highlight the major types of different market systems around the globe. Whether the society is developed orunderdeveloped, each market system has its ownadvantages and disadvantages.
Nowadays, there is no pure command nor pure freemarket economy. It cannot be denied that Economy is the key driving force inbuilding the country. It depends on each government’s intellectual, decisionmaking and policy to choose wisely which type of Economic system suits the bestfor the best benefit of its own country and people.