Difference Between Economics, Economy, Economic & Economical | Lucent for GK - UPSC PDF Download

Economics

Economics is a prominent social science that revolves around the study of the production, distribution, and consumption of goods and services within an economy. This field focuses on understanding the actions and interactions of economic agents, placing a singular emphasis on economic factors. There are two main branches of economics:

• Microeconomics: This branch analyzes the fundamental elements of an economy, such as individual agents, households, firms, buyers, and sellers. It aims to comprehend how these entities make decisions and interact in markets.
• Macroeconomics: In contrast, macroeconomics studies the economy as a whole. It explores the systems of production, consumption, savings, and investment, aiming to comprehend the broader implications of their interactions on the entire economy.

The practical applications of economic analysis extend to various sectors, including real estate, business finance, healthcare, environment, social institutions, war, and science. Even in ancient civilizations like Greek, Indus Valley Civilization, and Roman Empire, economic principles were evident, but modern economics, as we recognize it, traces back to the works of Scottish economist Adam Smith.

Economy

The term 'economy' refers to a social domain that emphasizes the practices and discourses associated with the production, use, and management of resources. It encompasses the entire system of production, consumption, distribution, and trade of goods and services within a region. Economies are diverse and can be categorized into three main types:

• Market-based Economy: In this system, goods and services are produced based on demand and supply dynamics between participants, either through barter or using an accepted medium of exchange with monetary value.
• Command-based Economy: Here, political actions and governing authorities heavily influence economic decisions. The government decides in advance what should be produced and how it will be distributed and sold.
• Green Economy: This emerging concept focuses on sustainable development. Growth and income are driven by public and private investments that aim to reduce carbon emissions and mitigate causes of biodiversity loss.

Economic

• The term 'economic' is employed to describe any action or object that is justified in terms of profitability. It is often used when referring to transactions involving money or other resources. Initially associated with household management in the late 19th century, it has evolved to encompass various aspects of profitable activities and resource allocation.
• Example: "In terms of economic prowess, India surpasses a vast majority of nations worldwide."

Economical

• 'Economical' signifies the wise and prudent use of resources, avoiding wastage wherever possible. It involves precise planning and resource allocation to maximize efficiency and minimize unnecessary expenses. Originally related to household management in the late 16th century, its current meaning emphasizes being 'not wasteful.'
• Example: "Tesla cars are more economical than conventional petrol-based cars, demonstrating greater efficiency on the roads."