Definition of 'Economics'
A social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants. Economics can generally be broken down into: macroeconomics, which concentrates on the behavior of the aggregate economy; and microeconomics, which focuses on individual consumers.
Economics is often referred to as "the dismal science."
General Characteristics
Economics studies human welfare in terms of the production, distribution, and consumption of goods and services. While there is a considerable body of ancient and medieval thought on economic questions, the discipline of political economy only took shape in the early modern period. Some prominent schools of the seventeenth and eighteenth centuries were Cameralism (Germany), Mercantilism (Britain), and Physiocracy (France). Classical political economy, launched by Adam Smith's Wealth of Nations (1776), dominated the discipline for more than one hundred years. American economics drew on all of these sources, but it did not forge its own identity until the end of the nineteenth century, and it did not attain its current global hegemony until after World War II. This was as much due to the sheer number of active economists as to the brilliance of Paul Samuelson, Milton Friedman, and Kenneth Arrow, among others. Prior to 1900, the American community of economists had largely been perceived, both from within and from abroad, as a relative backwater. The United States did not produce a theorist to rival the likes of Adam Smith (1723–1790), David Ricardo (1772–1823), or Karl Marx (1818–1883).
