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WHAT IS ECONOMICS?
Economics is a social science studying production, distribution, exchange and consumption of goods and services. Economists focus on the way in which individuals, groups, business enterprises and governments try to achieve efficiently any economic objective they select. Other fields of study also try to do that. Psychology and ethics try to explain how objectives are formed; history records changes in human objectives; sociology interprets human behavior in social contexts.
Standard economics can be divided into two major fields. The first, microeconomics explains how supply and demand in competitive markets create prices, wage rates, profit margins and rental changes. Microeconomics assumes that people behave rationally. Consumers try to spend their income in ways that give them as much pleasure as possible. As economists say they maximize utility. For their part, entrepreneurs seek as much profit as they can extract from their operations.
The second field, macroeconomics, deals with modern explanations of national income and employment. Macroeconomics dates from the book, The General Theory of Employment Interest and Money (1935), by the British economist John Maynard Keynes. His explanation of prosperity and depression is based on the total or aggregate demand for goods and services by consumers, business investors and governments.

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