Economics or Economy is something that we talk about daily. Both the words seem similar and we think that they both give the same meaning. Very few know the differences between these two words.
Economics vs Economy
The main difference between Economics and Economy is that economics is the study of the economy or the study of the rational choice of humans. And the Economy is a system, which is concerned about a particular country’s production according to the demand and exchange of goods and services.
Whenever we talk or think about the economy the first thing that comes to mind is Money. Is money the only thing that the economy and economics handle? or it includes certain other things as well?
The everyday life activity of a person includes the food that he wants to eat or a dress to wear or the way he wants to live. Economics and Economy play a vital role in every aspect of a man’s day to day life.
There is no particular answer set for economics. It is the study of the economy or study on the logical choice of humans. It analysis the decision of an individual, businesses, government, or firms on resources for maximum output.
The economy is a system, indicated about a particular region or a country of production, consumption, money supply, goods and services distribution and exchange among the organization or people. It gives the common value to different types of goods and services.
Comparison Table Between Economics and Economy (in Tabular Form)
| Parameter of Comparison | Economics | Economy |
|---|---|---|
| Meaning | It is a science, decision making art on the scarcity of resources concerning to provide maximum satisfaction to human | It is the economic activities of a particular area or country. |
| Preferences | It mainly gives preference to the scarcity of resources and need of a human | Preference areas are on the production based on demand and usage based on supply. |
| Nature | Theory of Principles and rules | Application of the theory of Economics |
| Determining Factor | It determines the decision on the scarcity of resources for a human being like how and when. | Distribution of Goods and Services |
| Focus | It mainly focuses on the behaviour and interaction of the firms and entities. | It focuses on the arrangement and management of the country’s economic affairs. |
What is Economics?
Study of the economy or a logical decision of a human is called Economics. The decision analysis of the individual or a government is carried out through Economics.
Economics allows human beings, individuals, businesses, government, or other firms to make decisions when resources are scarce how they going to use to fulfil everyone needs with maximum satisfaction.
It is the theory of principles and rules which the economy applies practically. And focuses on the interaction and behaviour of firms or agents on economics works.
It studies the activities and behaviour that are managed by individuals, firms, government, and businesses that are related to economic growth or welfare.
There are two types of economics known as Micro and Macro Economics.
- Micro Economics is focused on or studies about the behaviour and interaction of an individual consumer or individual firm. And how decisions are made on finance, goods and services, production, and market. Study of a small part of the economy.
- Macro Economics is, it studies the whole part of the economy national and international. The study includes foreign trade, unemployment, the standard of living people, poverty, education, medical condition, economic growth, and welfare.
Economics is the ordinary life of a business and its experience and choices of human beings. Economics is when you get up the morning and think about what to eat, what to wear, decide on going to a job or not. The decision which affects the economy is economics. Economics studies of unemployment, market, money, finance, environment so on.
What is Economy?
The economy is a process of understanding the value of finance for a particular country or a region. Goods and Services are valued at the same level in the case of the Economy.
The economy is the economic activity of a particular country or area and applies the theory of principles and rules of economics practically. It focusses more on how and when the resources to be produced and distributed among the consumers or society and focus on arrangement and management of economic affairs of the country.
It is a result that helps the individual, government, businesses, and firms to decide on economics. It arranges the production, consumption, business ethics, employment, distribution, goods and services exchange, purchase, price the goods, and market condition in a country or society.
Economics helps to solve the problems of the nation’s economy, such as What and how to produce goods, how much and when to produces goods, the target groups to be focused to produce goods and economic growth and welfare.
There are three types of economies are Market, Command, and Mixed economy.
- A market economy is one of the economic systems where the economic decision is taken by individuals or private sectors such as the price of goods, Supply of goods. The goods and services produced will be managed by the law of supply and demand.
- Command economy is another economic system where the economic decision will be taken by the government as what and how to produce goods. It will not depend on the law of supply and demand as the market economy does.
- A mixed economy is including both the market economy and command economy and where both government and individual or private sector decisions will be considered to allocate the goods.
Main Differences Between Economics and Economy
- The main difference between Economics and Economy is. Economics is a study of the decision making habit and economy of a human that is related to the nation’s economic progression, while the economy is based on a country’s value towards production and consumption in the bargain for demand and supply.
- Economics is the phenomenon of decision making whereas economic activities based on the decision is the economy.
- Economics is the Theory of Principles and rules and the economy is practically applying the economics theory.
- Economics tells us the scarcity range of a particular commodity while the economy is all about production and distribution.
- Economics is all about the interaction behaviour of firms while the economy is more focused on the arrangement of goods and services.
Conclusion
The two terms are way too different from one another. Economics is a study of economy and economy is a system that forms a part of economics. Economics helps to solve the problems of the nation’s economy. Economics is a broader aspect of any decisions made while the economy is the action taken towards sustainability.
The economy of a company depends on the nation’s behaviour while economics sets standards to the corrective measures. Economics is the bible to be followed and it is connected to the economy as a tool of development. To sum up, economics is to be assimilated while the economy has to grow.
References
- https://www.nber.org/papers/w6545.pdf
- https://ideas.repec.org/b/oxp/obooks/9780195575019.html