WHAT IS

ECONOMICS?

It is the study of efficient

allocation of available resources.
 RELATIONSHIP OF
ECONOMICS TO OTHER
DISCIPLINES
Politics

History

sociology
BRANCHES OF
ECONOMICS
 1.) MICROECONOMICS

Is the branch of economics that

deals with the study of individuals,
households and business
 2.) MACROECONOMICS

On the other hand, is the study of the

aggregate or much bigger scale than
what is covered in microeconomics such
as the national or global economics
ECONOMIC SCHOOLS OF
THOUGHT
 1.) CLASSICAL
ECONOMICS
This was an approach in economics that
was developed during the late 18th to 19th
century-on which it was advocated by
prominent names such as Adam smith,
David ricardo, Thomas Robert Malthus etc.
 ADAM SMITH

Inquiry into the nature and causes of the

wealth of nations which was published in 1776

 this one proposed that the country’s wealth is

proposed by the country’s total production
 KEYNESIAN ECONOMICS

John Maynard Keynes

He proposed that economic output is driven by

aggregate demand instead of the aggregate supply.

He also believed that the government should have

an active role in the management of the economy
 NEOCLASSICAL
ECONOMICS

This is focused on microeconomics.

Neoclassical economists: William

Stanley Jevons, Leon Walras and Irving
Fisher
 UTILITY OF
MAXIMIZATION

States that individuals will

maximize their satisfaction
THEORY OF THE FIRM

It states that firms are

naturally profit maximizing
 RATIONAL - CHOICE
THEORY
 Claims that collective individual decisions drive the
aggregate social behavior

 This theory rests on the assumption that individuals are

rational.

 It means that if you are presented with two choices you

would choose the most preferable option given the
information available to you.