Kinds of Economics:
The following are kinds of economies:
(1) Descriptive economics
(2) Theoretical economics
(3) Applied economics
(1) Descriptive Economics:
In this kind of economics, the economic facts concerned with agriculture industry, communication etc., are described in the form of figures. For example, to describe facts and figures concerning industry and agriculture in Pakistan is descriptive economics.
If we want to consider the causes and effects of shortage of sugar in Pakistan, in descriptive economics we’ll collect the facts and figures about production and industry of sugar e.g., how many sugar-mills are there in the country, how much quantity of raw material is available in the country, how much quantity of sugar is needed in the country, how much quantity of sugar is being imported from the foreign countries etc. We can say that in descriptive economics, all related facts about certain topics are collected.
(2) Theoretical Economics:
In general, economics is a science which studies the economic activities of the people in their social life. These activities have been focused by economists through inductive and deductive methods to arrive at economic theories/principles and economic laws. These theories and laws have been put together to make theoretical economic. Theoretical economics provides us the tools which can be used to analyse the economic problems of the people.
In this kind of economics, economic conditions or problems are studied neutrally and analysis is made about them. The purpose of this analysis is to understand economic problem or process of economy properly, so that limited resources may be used effectively.
In theoretical economics, the performance of economic systems and their distinct characteristics are discussed. In theoretical economics, it is also studied that what role an economic system plays to determine the prices in a country. Thus, the causes and effects described in theoretical economics formulate economic laws.
Kinds of Theoretical Economics:
Theoretical Economics or Economic theory has two parts:
(i) Positive economics (ii) Normative economics
(i) Positive Economics:
In positive economics, the progress of economy is examined being neutral. It means, problems of the economy are analysed on factual basis keeping in view causes and effects. It means, positive economics is related with the objective and scientific explanation of working of an economic system.
Kinds of Positive Economics:
Positive economics has two kinds:
(1) Microeconomics (2) Macroeconomics
(1) Micro Economics:
In micro economics, we study the separate parts and small units of an economic system. For example, we study the behaviour of a consumer or conditions of a firm or the condition of a certain industry or the prices of factors of production e.g., land, labour, capital and organization. In the same way, instead of a general level of prices, we study the individual price of everything. The incomes of individuals or the income of a firm or industry is examined rather than the rational income. In short, various units and parts of the economy are studied in micro economics.
Macroeconomics studies the economic actions and behaviours of an economy at aggregate or average levels and explains the problems at national and international levels. Macroeconomics is also called “The Theory of Income and Employment “, because it deals with the matters of unemployment, economic fluctuations, inflation, deflation, economic development, and international trade etc.
In normative economics solution of economic problems of a country is suggested. Economists suggest a personal solution of economic problems. Supposing that the distribution of wealth in a country is unequal.
The first economist will advise govt. to levy heavy taxes on the rich in order to make the distribution of wealth equal While the second advises to think about deeply before levying heavy taxes on the rich. It may not happen that rate of investment falls down because of levying heavy taxes.