Many
people believe that economics it is all about money. The term economics can have
many different definitions. It is “the study of scarcity, the study of how
people use resources and respond to incentives or the study of decision making”
(1). In fact, economics is a social science that deals with topics such as
wealth and finance but it is much more than only money.

Economics
studies how an individual, a business or any institution or organization make
important choices regarding the use of their resources to satisfy their wants
and needs. The study of economics involves three main factors that help to
determine how economy functions; it involves consuming, producing and the sale
of goods and services.

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Economics is generally divided into two
categories; the first category is macroeconomics. This category concentrates on
the economy as a whole entity. It studies the overall economy and some of the
topics studied include investments, economic growth, employment, government
intervention and more. The second category is microeconomics. Microeconomics
focuses on individual decisions, how these individuals make trades with others
and the different factors that may influence the demand and supply of goods and
services.  

When taking about economics, many people
wonder where did economics originate?

Adam
Smith is identified as the father of modern economics. “Smith was a Scottish
political economist and philosopher, who became famous by his influential book The Wealth of Nations (1776).(2)”  However he might have been inspired by French
writers who shared their ideas on how economics work. Adam Smith took some of
these ideas and expanded them in his book, explaining how economics should work
as opposed to how they were working.

With
the Wealth of Nations, Smith
established himself as “the leading expositor of economic thought. (3)” Smith’s
book was published as a five-book series that “described the nature and cause
of a nation’s prosperity (3)”. According to Smith, the pursuit of someone’s own
self-interest, the precision of labor and trade between nations it is what
determines the wealth of a nation.  

            In the Wealth of Nations, Smith
begins explaining how production and exchange have a big contribution to the
national income. He uses an example on how assigning certain tasks to different
people can boost the productivity to a higher level. Smith also believes that
building a capital, by saving some of the goods that have been produced instead
of selling them immediately will help to have a better condition and to have
economic progress.

For
Smith, someone who was earning money by their own labor benefits themselves but
without knowing is also benefiting society because it is earning goods in a
competitive free market and must be producing something that others will value.

            Smith also published a book called The Theory of Moral Sentiments in which
he shows that “our moral ideas and actions are product of our very nature as
social creatures. (4)” This book identifies what is needed to survive on
society and explains what it must be done. Smith argues that as individuals, it
is natural to look after themselves first. That can be considered ethically
wrong, because people are looking forward to doing something that might have a
benefit on them, but it doesn’t matter if this action affects others. Ethics
studies the values and virtues of human beings and explains how a value is a
good to achieve something or if it is a standard that someone might have to
follow to achieve the good, whether it is right or wrong.

In today’s economy, ethical issues have a
connection with economic issues. Investors, producers or any individual can be
doing something that it will be considered good for their company, but it might
be morally incorrect. According to Smith, not everything related to
self-interest can be considered bad, human beings might be selfish but also
have the capacity to help others when it is needed, and this is what makes
possible to “live together peacefully in the moral sphere and productively (in
the economic). (4)”

For college students in general, the study
of economics will give them a background of how the economy of the country
works and will help them to develop skills that will be useful for them in the
future. For those who want to major on economics or any business area they will
have an even more strong background in microeconomics and macroeconomics, will
have more knowledge about economic institutions and their functions, and will
acquire knowledge in different areas of this field. Economics majors will
prepare these students for careers that have to deal with banking, insurance
services, government agencies and other organizations. It will also provide a
foundation for those students who will decide to continue their education
beyond the bachelor’s degree, will be a good preparation for students who will
like to pursue a law career and other business and social science areas.

In general, every individual should know
that it is important to care about economics. In this country we have a free
market economy, it is a flexible and adaptable system which can vary from time
to time, but it will work with whatever the future may bring. Economics has an
impact on everyone’s lives and learning about its concepts can help you
understand what it is happening on a day to day basis, it will help you to make
better financial decisions, understand economic policies and see the world in a
different perspective.

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