ECONOMICS

Economics is the social science that analyses the production, distribution and consumption of goods and services. The origin of term 'Economics' is from the greek word 'Oikonomia', which has the meaning 'Home Administration'. The study of economics is known as 'Aphnology/Plutology'. It has the meaning of 'The Science of Wealth'. Adam Smith is the father of Modern Economics. He laid the clear foundation of Modern Economics. He is the pioneer of political economy. He wrote the first modern book on economics - 'Wealth of Nations'. Economics has two branches - Micro Economics and Macro Economics.

Micro Economics - Micro Economics is the branch of economics that deals with the personal decisions of consumers and entrepreneurs. It is also known as Price Theory. It is developed by Marshal, Ricardo and Pigou. Example - Income/ Expenditure/ Employment of a Person.

Macro Economics - Macro Economics deals with the larger aspects of nation's economy such as sectors of agriculture, industry and service. It is also known as General Theory or Income Theory. It is developed by J.M.Keynes. Example - The Total Income (National Income/ Gross Expenditure/ Gross Employment) of a Country. 

Division of World Nations

Based on Economics, World Nations are divided into three - Developed Nations, Developing Nations and Least Developed Nations.

Developed Nations - Developed Nation is a country which has a highly developed economy and advanced technological infrastructure relative to other less developed nations. USA, Canada, France, England, Germany etc are considered as developed nations. Continent with highest number of developed nations is Europe. Singapore, Japan, South Korea are the developed nations in Asia.

Developing Nations - A Developing Nation is a nation with a low living standard, undeveloped industrial base and low human development Index (HDI) relative to developed countries. Economically backward states are known as developing nations. 'Third World Countries' is another term for developing countries. BRICS Countries are the fastest growing economies in the world.

Least Developed Countries - Least Developed countries exhibits the lowest indicators of socio economic development with the lowest Human Development Index ratings of all countries in the world. They are under developed economies in Asia, Africa and Latin America. They have very low GDP, Low Per Capita Income, High rate of Population and Unemployment. Example - countries like Ethyopia and Somalia.

Economist and their Contributions

■ Alfred Marshall - Marginal Utility Theory, Welfare definition of economics, Principles of Economics, Law of Demand

■ Thomas Malthus - Population Theory

■ Adam Smith - Laissez Faire

■ Marshall - Quasi rent

■ Lionel Robins - Scarcity/Human Behaviour Theory

■ Karl Marx - Capital, Labour Theory of value

■ Samuelson - Modern utility theory, Growth Definition

■ Amartya Sen - Welfare Economics and Human Development Theory

■ Daniel Kahneman (USA) - Behavioural Economics, Prospect Theory

■ Edward C. Prescott (USA) - Quantitative general equilibrium business cycle theory

■ Edmund S. Phelps (USA) - Micro foundations of Macro Economics

■ Joseph E. Stiglitz (USA) - Screening

■ James Tobin (USA) - Portfolio theory, Keynesian Economics

■ James J Heckman (USA) - Statistical analysis of individual behaviour