is the social science that study about human business activity such as
consumption, production, saving, exchanging and distribution of commodities.
Consumption and production are the two main factors of economics.
Scarcity is the central economic
problem. Human scarcity born between the existence of unlimited human wants and
limited factors of production (eg,.Land, Labour, Capatical, Technology and
Economics can be satisfied the human
wants with limited resources. Microeconomics and Macroeconomics are two main
area of economics.
Microeconomics is the economics area that analyses
individual decision making of consumers and producers and they make markets
together. It also studies the improvement of markets by using their behavior,
the decision making through demand and supply condition, the effects of rules
and regulation and any other circumstances.
In Macroeconomic, the consumer choices
is the most important facts such as what they would like to buy, how they
choose and whom actually they would like to buy commodities.
Macroeconomics analysis the behavior of the economic
system as a whole. Macroeconomics concerns with aggregates behavior like the
national incomes, the governmental taxation and subsidies gross national
product (GNP), growth of nation, cyclical fluctuation, inflammation and etc.,
There are two sets of tools in
macroeconomic: fiscal and monetary
policy. Macroeconomic policy achieve the economic goals of stability price,
full employment and market growth by limiting the effects of the business
Fiscal policy that is using revenue
of government and expenditure as resources to influence the market. For example: expenditure, taxes, debt.
Monetary policy is processing the monetary authority of a country such as central bank, currency board or other
regulatory committee. Monetary policy is also maintained the actions such as adapting
the interest rate, government bonds buying and selling.
Microeconomics cannot mention the economy function as a whole .Also,
Macroeconomics cannot give the idea of the individual behavior of economics. So
both Micro and Macroeconomics studying can complete the whole system of
primitive economics, people use their resources to fulfill their needs and
wants. Likewise, a subsistence economy that depends on the nature of resource
to complement of human basic needs or wants such as the tailor’s made the dress
mainly for his family own wearing.
(Gemma, 2014 ) Mentioned that there are four types of economics:
Traditional Economic System, Command Economic System, Market Economic System
and Mixed Economic System.
Traditional Economic System
A traditional economic system is the most
traditional and ancient type of economy in the world. In the traditional
economy, beliefs, customs, traditions, religions, socials and etc., largely
determined economic matters. (Amadeo,
2017) Referred Traditional economies depend
on agriculture, fishing, hunting, gathering or some combination of the
above. In place of Money, they are using barter .
Most traditional economies operate in emerging markets and developing countries such as Africa, Asia, Latin America
and the Middle East. Economists and anthropologists believe that traditional
economies started all other economics. So, they expect remaining traditional
economies to develop into mixed, market, and command economies over time.
2000)Stated that in the command economy,
the decisions are taken by an all-powerful planning authority. (Ericson, 2006)Indicated that the command
principle is likely to clash with the operation of market forces, yet a command
economy contain and rely on the market mechanism in some of its sectors and
areas: for example, influencing labor allocation, or stimulating small-scale
private production of some consumables.
(DePersio, 2018)Referred that there
are advantages and disadvantages in the command economy. Low levels of
inequality and unemployment are one of the advantages of command economy. This
can also be stable growth in economic .However, there is lack of competition
and lack of efficiency in the common economy. There can be problems of
gathering information and inappropriate incentives.
Market Economic System, the decision is emphasis on demand and supply. Customer
choice goods that they are willing to pay for them. The owner used their
resources in production to obtain the maximum output as possible as they can.
Therefore, the price system reply on the consumers wish and allocates the
community’s productive resources. Labors can also choose work wherever they
want freely. There is competitive markets responsive to consumers.
market competition may be limited .There can be inequity and the sellers
ignored the environment and other social goals.
An attempt to get the both command
and market economic system, mixed economic system are appeared .Mixed economic
system combine the advantages of command and market economic system consisting
of private sector and public sector.
Practically, subjective judgments are involving many economic
decision .People cannot make objective judgments solely in economic decision
.So that,the economists try to make objective decision as possible as they can
.They establish principles that are showing how economy works and how can be
used to predict likely policies result .As the nature of economics is the zone of economy where objectivity ends and