Fundamentally and historically, economics can be divided into 2, namely:
|Scope of Economics|
1. Positive Economics
Positive economics only discusses the description of facts, situations and relationships that occur in the economy. Positive economics is a science that involves itself in the problem of “what happens”. Therefore, economics is neutral to values. That is, positive or value-free economics, only explains ‘what is the price’ and ‘what happens if the price goes up or down’ not ‘whether the price is fair or not’
2. Normative economics
Normative economics only discusses considerations of ethical values. Normative economics assumes that economics must involve itself in finding answers to the question of “what should happen”. Economics as part of the social sciences, is certainly related to other academic disciplines of social science, such as political science, sociology, psychology, anthropology, history, geography, etc. As a discipline that studies economic aspects and human behavior, it also means studying economic events that occur in society.
Thus it can be stated that the purpose of economics is to seek an understanding of the relationship of economic events, both in the form of causal and functional relationships and to be able to master the economic problems faced by society.
Economics has a micro and macro scope so it is easy to learn. Both provide clear boundaries and assumptions, namely:
Microeconomics is a branch of economics that specifically studies small parts (individual aspects) of the overall economic activity. Analysis in microeconomic theory includes the behavior of individual buyers (consumers) and producers in the market. The attitudes and behavior of consumers are reflected in using the income they earn, while the attitudes and behavior of producers are reflected in offering their goods. So the core in microeconomics is the problem of determining prices, so microeconomics is often referred to as price theory.
The goals and objectives of microeconomic analysis are more focused on how to make choices for;
- Achieve efficiency in the use of resources, and
- Achieve maximum satisfaction.
Macroeconomics is a branch of economics that specifically studies the working mechanism of the economy as a whole (aggregate) related to the efficient use of available production factors so that the prosperity of society can be maximized. If the issue of producers is discussed, then what is analyzed by producers as a whole, as well as if consumers are analyzed are all consumers in allocating their income to buy goods/services produced by the economy. Likewise with the variables of demand, supply, company, price and so on. In essence, macroeconomics analyzes the determination of the level of economic activity as measured by income, so that macroeconomics is often referred to as income theory.
The aims and objectives of macroeconomic analysis include discussing the problems
- The aggregate demand side in determining the level of economic activity, and
- The importance of policy and government intervention to realize the desired achievement of economic activities.
Economics requires analytical tools to explain its theories and to test the truth of these theories. Graphs and curves are the main analytical tools, at a deeper level mathematics plays a very important role. In addition, statistics are also needed to collect facts and test the truth of economic theory.