In economic terms, an economy is a place of the exchange, production and distribution of goods and services, by various producers and other agents. In laymen’s terms, it is defined as ‘a community of persons, associations, organizations and political units based on the norms of community production and consumption.’ The production of wealth is not only the product of human labour but also of machines and other technological developments. Economists define a stable economy as ‘a market economy in which goods and services are produced and exchanged according to the physical needs and desires of the individuals.’
In the narrowest sense, economics refers to the science of how people, firms or households allocate scarce resources to satisfy their competing wants. More precisely, economics uses concepts like opportunity cost of capital to analyse the allocation of scarce resources across various economic positions and institutions. Economics has long been a field interested in the widest range of human action, affecting all aspects of life from investment choices to international trade. This discipline has been greatly influenced by the work of such giants as Nobel Prize winner Sir Alfred Nobel, who is responsible for the great aim of establishing the institution of a national bank. Economics is the study of how people, individually or collectively, make decisions about how to allocate scarce resources so as to meet their needs and compete successfully for position in the marketplace.
Today, economics is one of the most important fields of research because, literally, everyone has an opinion on how to organise society. Even in the simplest societies around the world, people have a stake in how their societies operate, what governments do, what industries should develop and how much money the public spends. All over the world, people living in wealthy countries spend much more on the basics of life than those living in poor countries, despite the fact that there is much more money available to them. This has led to serious problems like inequality of wealth, poverty and hunger. Economics offers many solutions for these issues and it holds the key to the future of economies.