Positioning of Economics and its Impact and Development in the Twenty-First Century

 Positioning of Economics and its Impact and Development in the Twenty-First Century

Economics, the science dealing with the production, distribution and consumption of goods and services is one of the key determinants of civilization evolution. Economics is study and science of how people decide to employing its principles and practices in politics, business, and personal and public life with regards to making choices concerning policy measures, investments, and savings. In the 21 st century making sense of economics is as important as any other thing that one will ever wish to know in his or her lifetime. In this blog, I shall write about the definition of economics and its origin; as well as the importance of economics in the current society.

     What isEconomics?

Economics is often divided into two main branches: the two main branches of economics in terms of scope of the fields; micro economics and macro economics. Microeconomics is centered on people and companies and the way they work in markets to use resources, and supply goods and services. Macro economics, on the other hand is the branch of economics that deals with larger economy and it looks at the whole magnitude of economy and not individual operational economy including inflation rate and national income.

         Key Concepts in Economics

1. Supply and Demand: This basic strand defines the role of the amount of a particular product produced and supplied in relation to consumers’ demand as the main determinants of the price of the product. As demand goes up, but supply remains stable, prices are high and when supply goes up, but demand remains low, the prices are low.

2.  Opportunity Cost: Expenses incurred when deciding that the benefits of the second best activity are less than or inferior to those of the chosen activity. It supports a notion that every opportunity comes with equal cost.

3. Market Equilibrium: This state is achieved when either the supply of a good or service is equal to the demand,thereby enhancing the prices. Market equilibrium is important in an effort to explain how marked work in their efficiency.

4.   Economic Incentives: They are incentives that encourage and compel people and companies to undertake particular courses of actions or decisions. Knowledge of incentives is instrumental in predicting behavioral patterns in the economic setting.

5.   Marginal Analysis: This consists of looking at the incremental advantages and liabilities of a decision. Marginal analysis is necessary for making the right decisions, be it to an individual or to a business firm.

 Part One of the book comprises the Historical Evolution of Economics, offering an analysis of the historical introduction, classical political economy, neo-classical and the early modern economic thought.

       Classical Economics

The classical economy, founded in the eighteenth and nineteenth century, forms a part of the basis of the modern economical concept. Adam Smith, David Ricardo, John Stuart Mill and other economist of classical era pinned their belief on free markets, competition and the invisible hand. For details, Adam Smith in his book “The Wealth of Nations” explained the concepts of the division of labour and trade.

                                         Keynesian Economics

In the 20th century, classical economic theories were just given a major blow by the Great Depression. These are funds that are available for borrowing but in excess are not funding operations since it was John Maynard Keynes who changed the theory of economics with his book “The General Theory of Employment, Interest and Money.” He insisted that cycling in an economy needs to be regulated by the government and the aftermaths of recessions should also be countered by governments. His ideas resulted in creating the approach of macroeconomic policies which include fiscal and monetary policy to balance economies.

 The next challenge was Monetarism followed by New Classical Economics Both Monetarism and New Classical Economics emphasized the self correcting features of markets, sustained by the efficient working of discretionary fiscal policies.

In mid twentieth century, Keynesian policies came under attack from Milton Friedman and other economists who advocated monetarism and who asserted that controlling money supply was key to overcoming inflation. The monetarist approach was built on these premises by such authors as Robert Lucas, new classical EE.

 Contemporary Economics

Today economics remains a rapidly developing science, which has absorbed the achievements of behavioral economics, game theory, and empirical analysis. As I said, behavioural economics, for instance, studies psychological aspects of decision making, thereby discrediting the rational man model. Game theory is used to examine cooperative and competitive behavior and is thus of interest in explaining rational behavior.

 The effectiveness of economics in the present day society

           Public Policy

Economics is perhaps the biggest determinant of public policy making in areas such as revenue and expenditure, trade and globalization and environmental policies. Economics is an arm of government that policy makers employ to create policies aimed at stimulating growth, reducing income disparity and managing risks associated with personal financial decisions. For instance, during a ‘Recession’ government have to come up with what is referred to as stimulus package in order to stimulate demand in the economy and put people to work.

          Business and Industry

In the business environment, all the activities – from price setting to resource allocation – are fueled by economic theories. By using data, many corporations can determine the ideal way of operating for the benefit of their shareholders’ finances and endeavor to achieve their goals. Economics assist organizations in survival and management of resources in dynamic environments for the maximum achievement of strategic objectives.

               Personal Finance

Economics is also at work in the application of personal finance. People apply knowledge in economics when planning their earnings, setting up money for the rainy day and when making an investment. It takes concepts such as compound interest, risk management and diversification to put the money together and achieve a reasonable economic stability.

                            Globalization

The globalisation of the economy:further funded the linkages of markets and expansion of the cross-border flow of products, services and capital. The integration has since created much economic development, but at the same time created other problems including income stratification and environmental pollution. To understand the consequences of such integration, economists research on changes likely to occur with a view of designing policies that are most likely to benefit all parties involved with minimal negative impacts.

      Technology and Innovation

Technological changes have dynamited the economies in the process of development and new economy generation. The huge potential of the digital economy, artificial intelligence, and automation have their called pros and cons. These trends are studied by economists for the purpose of the development of labor markets, productivity and economic growth analysis.

      The Future of Economics

Sustainability and Environmental economics are two relatively new but very closely related branches of economics.

As people develop a concern with climate change and depleted natural resources, environmental economics as an academic field intensifies. It is a study of the impact of economic processes and working on environment policies for sustainable economic development. Scholars are currently generating models to estimate impacts of the environmental policies and costs of carbon controls and sources of renewable energy.

    
       Inclusive Growth

Eradication of economic disparity is one of the major tasks for the future. Some of the prospective approaches being assumed by the economists are to encourage equitable economic development in the society. Measures like taxation, social security, education, and training policies or even affirmative actions strive to eliminate unfairness while providing chances for everybody.

          Digital Economy

The digital economy is introducing new forms of disruption in the old well-established economic models. New manufacturing industries such as e-commerce, virtual currencies and gig economy have revolutionized how products and services are created, marketed and even purchased. These trends are being analyzed by economists for learning the dynamics that exist in the labor market as well as the consumption pattern of people and other relevant issues of policy concern.

  Behavioral Economics

Here, it comes again to prove that behavioral economics has a role of directing policy and business strategies by giving more understanding on the behavior of individuals. Analyzing the evidence on heuristic decision making on the HBS spot video and decision games that followed and combining it with social marketing theory, display the practicality and effectiveness of the economic model; thus, alerting economists on how cognitive biases and social factors mediate the effect of a well-articulated financial literacy intervention, savings promotion, and healthy behaviors.

      Global Cooperation

Today, the world is getting more and more interconnected and only joined efforts can help solve problems in the economy. Some of the topics that we cannot solve individually include trade conflicts, financial v and also pandemics. For these reasons, economists are crucial to action processes that form the framework of global cooperation and to the formulation of measures to address issues arising worldwide.

Conclusion

Economics is an optimistic science that is changing with each passing day so it influences our lives. Choices of people and companies, actions of states and the flows of the international economy are conceptualized through theories in this field. It has therefore become relevant to have a proper advance of economics to be able to meet all the challenges and exploit all opportunity of the 21st century to ensure people have a good standard of living. In policy making, business planning, budgeting, and, in general, managing a household, the lessons learnt in economics will for continued relevance as the world economy undergoes its transformations.