Identification

• The word "economics" comes from Greek for the manager of a household. Families and economies, as Harvard economist Greg Mankiw points out, have a lot in common. Management of a household involves decisions over what tasks should be done and who should do them, such as who raises the children, who supports the family and who does the chores. Managing a household requires decisions about how to allocate such resources as time and people to achieve the best household management.
  
  The field of economics goes beyond the household to the society at large. Societies must decide what jobs will be done, what products to produce and who should perform what tasks.
  
  Economics studies how societies manage resources to satisfy people's wants and needs. This definition can apply to individuals, families, companies and even entire nations.
  
  

Significance

• Resource allocation is important in economics because resources are scarce. People have unlimited wants and needs, but society cannot provide every single thing that people want. This means decisions must be made about what to produce, who should produce it and for whom it should be produced.
  
  

History

• Economics emerged as a discipline in the 18th century as a branch of moral philosophy. Originally, economics was known as political economy and studied issues of labor and production, and their relationship to government and law. In the 19th century, the term "economics" had largely displaced "political economy," although the latter remains in use, usually to describe the interdisciplinary study of economics and politics.
  
  

Types

• Two main branches of economics exist: microeconomics and macroeconomics. Microeconomics examines the actions of individuals and firms, and how they interact. Macroeconomics studies the economy at large, examining such phenomena as inflation, unemployment and gross domestic product.
  
  The discipline has spawned a large number of specialty areas that focus on specific areas of life, including public economics, financial economics, agricultural economics, industrial economics, the economics of education, health economics and many others.
  
  

Benefits

• Studying economics deepens a person's understanding of the world by answering such questions as why some jobs are hard to find, why some countries have higher standards of living than others, or why homes cost more in some parts of the country than in others. Economics also prepares people to be more knowledgeable participants in the economy and improves knowledge of economic policy, as well as of the limits of government actions.