ECONOMICS and ECONOMY
1.Economics – a science
The economics is a science deals with the main issues of any economy and deals with the laws governing of economic life of a society.
The most important questions are: what, how and for whom to produce and how to reach to
stable econimic development without crises.
The economics has two branches:
1) microeconomics – deal with problems concerning business firms, households,
markets, behaviour of customers and prices of single products
2) macroekonomics – deal with examinations and explains economic facts as
unemployement, inflation, recession, economic stability and
prosperity
- Origins of economics
Economic started at the end of the 18th century at the time of the Industrial Revolution.
The founder of the Classical Economic Scholl was Adam Smith. He was a Scottish economist and philosopher who thought a theory – the Invisible Hand. This theory represented market mechanism – market forces of supply and demand.
- Economy
The economy is a complex of activities and subjects concerned with production, distribution, exchange and consumption of goods.
- Sectors and industries
Industry is a sector of any economy
We know 3 types of industry:
1) primary industry – is a agriculture, mining and extracting raw materials
or turning out semi – products
2) secondary industry – deals with processing raw materials and manufacturing in works,
(factory, mill,plants)
3) services – are sometimes called the tertiary industry
- Economic system
E.S. deals with questions: What does the economy produce?
How are the goods produced and distributed?
For whom are the commodities manufactured?
5.1 Tradition economy – custom economy
It is oldest economic system, which still exist in primitive societies. People stisk to their traditions and cutoms. People themselves make all the things necessary for their lives.
5.2 Command economy, centrally planned economy
This system was typical of socialist countries. In such a system all economic decision are made by the government. The result of such system was a shortage of some goods for which there was demand and abundant of goods that nobody wanted.
5.3 (Free) market economy – market manager economy – free-enterprise economy
The Invisible hand is represented by the market forces, the law of suupply and demand, which helps to determine automatically what to produce, how much and for whom without the asistence of any central autority.
Profitability is the main indicator for manufactures of what to produce.
5.4 Mexid economy
A mixed economy combines certain features of market and command economic system.
5.5 Transition economy
This economy changed from a centrally planned system into an open-market economy.
The transformation measures include restitution of private ownershio through masive privatization, liberalization of prices, freeing of trade, and revision of laws.