Economics
Economics is a system of human activities associated with the production, distribution, exchange, and consumption of goods and services. The word "economy" it self comes from the Greek word Oikos which means "family,household". And nomos, or "rules, regulations, laws," and generally translated as "household rules" or "management household. "
While the definition of an economist or an economist is a person using economic
concepts and data in the work. The study of economics known as economics.
Development economics
Adam Smith is often referred to as the first development economics in the 18th century as a separate branch of science. Through his great work The Wealth of Nations, Smith tried to find out the history of development of countries in Europe. As an economist, Smith did not forget the roots of morality, especially as stipulated in The Theory of Moral Sentiments. The development history of economic thought and then continued to produce such figures as Alfred Marshall, JM Keynes, Karl Marx, to the Nobel Prize in Economics in 2006, Edmund Phelps.
In general, the development of schools of thought in economics initiated by the so-called classical flow. The flow of mainly pioneered by Adam Smith emphasizes the invisible hand to regulate the distribution of resources, and therefore the government's role becomes very limited because it will interfere with this process. The concept is then invisble hand is represented as a market mechanism to price as the main instrument.
Classical flow experienced failures after the Great Depression of the 1930s which showed that the market could not react to the turmoil in the stock market. As a classical flow penanding, Keynes proposed the theory in his book General Theory of Employment, Interest, and Money which states that markets are not always able to create a balance, and therefore government intervention should be done so that the distribution of resources to reach the target. Two streams are then each "fight" in the world of economics and produce many variants of them such as: new classical, neo classical, new Keynesian, monetarist, and so forth.
But developments in developing this idea in another direction, such as class conflict theory of Karl Marx and Friedrich Engels, as well as the first institutional flow developed by Thorstein Veblen et al and later by the Nobel laureates Douglass C. North.
The properties of Economic Theory
General properties of theories in economics. Every theory has the following 4 essential elements:
- The definitions of the best menjelaskandengan variables related properties are described in the theory.
- A number of assumptions about the situation in order to form the theory applies very well.
- One or several hypotheses about the nature of the relationship between various variables in question.
- One or several predictions about the circumstances that will apply.
Main problem is the shortage economy.
Problem of scarcity or lack of effect as a result of an imbalance between :
- The needs of society
- The factors of production are available in the community
