Learn Economics by Dr. Swati Gupta

  Definitions of Economics given by Adam Smith, Alfrad Marshall and Robbins The word ‘Economics’ was derived from the Greek words ‘Oikos’ (a house) and ‘Nemein’ (To manage), which meant managing a household, using the limited money or resources a household has. Economics as a subject came into being with the publication of very popular book in 1776, “An Enquiry into the Nature and Causes of Wealth of Nations”, written by Prof. Adam Smith. At that time, it was called Political economy and regarded as a branch of statecraft. The great Indian statesman, Kautilya, named his book on statecraft as Arthashastra, the Hindi equivalent of ‘Economics’. Various definitions were given by various economists’ time to time. L.M.Fraser has classified definition of economics into Type A and Type B. Type A definitions are related to wealth and material welfare and Type B is related to the scarcity of means.   Type A definitions   Adam Smith's Definition of Economics, it's features and criti...

  Robbins' definition, it's features, superiority and criticism Lionel Robbins provided a new definition of economics in his book, “ Nature and Significance of Economic Science ”, published in 1932. According to him, “ Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses .” Robbin's definition is based on the following aspects: Ends or wants are unlimited and as one wants gets satisfied another arises that’s why we have to make a choice between the most urgent want and less urgent wants. Thus, the problem of choice arises. That is why economics is also called a science of choice. ‘Means ’or resources to satisfy human wants are limited. The means refer to goods and services which are used to satisfy human wants. These resources are scarce and to be used optimally to get maximum satisfaction. For example, money is an important means to satisfy many of our wants. We use it optimally and make choice...

Alfred Marshall’s definition of economic, its features and criticism The neo-classical view : Welfare Definitions-Neo-classical economists focused more on welfare and the emphasis was shifted from ‘wealth’ to ‘ welfare ’. According to Cannan , “The aim of political economy is the explanation of the general causes on which the material welfare of human beings depends.” According to A.C. Pigou,” Economics studies that part of social welfare which can be brought directly or indirectly in relation with measuring rod of money.” Alfred Marshall in his book, “ Principles of Economics ”, published in 1890, describes economics as, “ It is the study of mankind in the ordinary business of life; it examines that part of the individual and social action which is most closely connected with the attainment and with the use of the material requisites of well- being. Thus, it is on the one side a study of wealth; and on the other, and more important side, a part of the study of man ”. The important fe...

                                       Adam Smith's Definition of Economics, it's features and criticism The classical view: Wealth Definition : The early economists like J.E. Cairnes, J.B.Say, and F.A.Walker have defined economics as a science of wealth. Adam Smith, the father of economics, in his book in 1776, “An Enquiry into the Nature and Causes of Wealth of Nations”, stated that “Economics is the science of wealth.” He defined economics as “A science which enquires into the nature and causes of wealth of nations.” According to him, wealth may be defined as those goods and services which command value-in- exchange [Value-In-Exchange means the amount of money or goods that is actually paid for a product or service.] and economics is concerned with the problems arising from wealth-getting and wealth-using activities of people. Thus, we study, in economics, about consumption, production...

Why We Study Economics Economics is the study concerned with the proper use and allocation of resources for the achievement and maintenance of growth with stability. An economy exists because of two basic facts- unlimited wants and limited resources. An individual or a society has to decide how to use its scarce resources to obtain the maximum possible satisfaction. It is this basic problem of scarcity that gives rise to many of the economic problems which have long been the concern of economists. We can say that  Economics studies the way a society chooses to use its limited resources which have alternative uses, to produce goods and services and to distribute them among different groups of people . When we study economics, we not only gain the skills needed to understand complex markets of an economy but also get strong analytical and problem-solving skills. There are four main reasons to study economics: ·       To learn a way of thinking, ·  ...

The Concept of Multiplier The concept of multiplier was first developed by F. A. Kahn in his article "The Relation of Home Investment to Unemployment" in the Economic Journal of June 1931. Kahn's multiplier was the Employment Multiplier.   Keynes took the idea from Kahn and further refined it and formulated the investment or income multiplier. Investment multiplier refers to the number of times by which the increase in output or income exceeds the increase in investment. According to Keynes, “The multiplier establishes a precise relationship, given the propensity to consume, between aggregate employment and income and the rate of investment. It tells us that, when there is an increment of investment, income will increase by an amount which is k times the increment of investment" i.e., ∆Y=k∆I where Y is income, I is investment, ∆ is change and k is the multiplier. For example, if investment is made of Rs 100 crore, then the income will not rise by 100 crores o...