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Wednesday, 4 July 2018

Modern definition of Economics

The credit for the modern definition of economics goes to Lord Keynes. He said that economics studies how the level of income and employment in an economy is determined. According to him , Economics is defined as the study of the rational management of scarce resources and of the determination of income and employment. This view of Keynes modifies the definition of Robbins who stated economics as study of relationship between wants and scarce resources which have alternative uses.

Keynes definition insist upon stability of economy. In his words, economics studies the cause of fluctuations in the economy.

Economic growth and economic stability are main part of study of economics.

There are various definitions given by economists e.g wealth definition( Adam) , Material welfare ( Marshall), management of scarce resources having alternative uses ( Robbins) etc but some are broad and narrow. Hence a proper definition must cover all fields to indicate correctly what economics is:

" Economics deals with the proper management of scarce resources and maintenance of growth with instability"

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