1. What does economiscs study?

Money and perhaps such complicated things like business and unemployment. In fact, economists study the decisions we take evety day.Very simply, economics studies the way people deal with a fact of life: resources are limited but our demand for them certainly is not. There are some resources though that we cannot touch. Time, space and convenience. There are only 24 hours in one day and we have to choose the best way to spend them. Every decision we make is a trade-off. If you spend more time working, you make more money. Economists stude the trade-offs people make. They study the reasons for their decisions. They look at the effects those decisions have on our lives and our society.

What are macroeconomics and microeconomics?

Economists talk about microeconomis and macroeconomics. Microeconomics deals with people like you and me and private businesses. It looks at the economic decision people make every day. Microeconomics also deals with cpmpanies – small or large – and how they run their business. Macroeconomics on the oher hand looks at the economy of a country and of the whole world.Another way to look at the science of economics is to ask “what s it good for?” Some practice positive economics. They stude economic data and try to explain the behavior of the economy.Other practice normative economics. They suggest how to improve the economy. Positive economists say “this is how it is”. Normative say “we should..”So ehat do economists do? Mainly they do three things: collect data, create economic models and formulate theories. Economic models show relationships between these different data.

2. History of economic thought.

Economic thought goes back thousands of years. The ancient greek, Xenophon, used the word oikonimikos(household). He was talking about skilful or clever ways to manage land and households.

Early economic thought as all about the meaning of wealth and being rich. These early thinkers asked, “what makes the state wealthy?” For nearly 2000 years the answer was gold. Then trading between nations grew and a new social class appered. These were merchants, people who made money through selling and buying goods. They saw the economy as a a way to make the state strong. For them the nation’s wealth depended on stocks of gold and the size of the population. Modern economies was really born in the 19^th century. At this time thinkers ike adam smith wrote down their ideas. Smith realized that a nations wealth depended on its ability to produce goods. The value of these goods depended on the cost of production.This was the first example of macroeconomics. In neoclassical economics supply and demand make the economy work. In other words, the price of goods depends on how much people wanr them and how easily they can be found. These ideas are still the basis of economic thinking today.

3. Econometrics.

Economists like to make theories. They theorise about why inflation happens or what causes unemployment. To test a theory, you first need to gather empirical evidence. That’s evidence that can be measured, like money. Then you are ready to do the maths and statistics to test your theory. Economists call their maths econometrics. Of course, we cant measure happiness exactly, but with econometric maths we can give it a value. Then we can see how that value differs between groups of people or cultures. This is called analysis. There are two kinds of it: time-series and cross sectional. Time-series shows how changes vary over a period of time. Cross sectional analysis compares things at one point in time between sections or gendres.