What is Classification of Economics ? Economics are classified into two major types which are an under;
(i) Theoretical Economics.
(ii) Applied Economics.
In general, Economics is a science which studies the economic activities of the people in their social life. These activities have been focused by economists through inductive and deductive method to arrive at Economic theories/principles and Economic laws. These theories and laws have been put together to make theoretical economics. Theoretical Economics provides us with the tools which can be used to analyze the economic problems. Theoretical Economics or Economic theory has two parts.
(A) Micro Economics
(B) Macro Economics
ECONOMICS IS A SCIENCE AS WELL AS AN ART :
ECONOMICS AS A SCIENCE : We know that science means the collection of facts of a certain nature through observations, experiments or experiences. Now, in the light of this definition, we have to see whether Economics is a science? Economics is certainly a science because in this subject, we study the Economic realities of life collected through observations and experiences. For example, the biggest reality of our Economic life is the multiplicity of ends, scarcity of means and their alternative uses. This Economic reality establishes the fact that there always exists an Economic problem for mankind and there is always a need for its possible solution. Economists have made laws and theories by their observations and experiences in the Economic life of the people to solve the problem. For example, law of demand, law of supply, law of diminishing marginal utility, marginal productivity theory etc. are some of the Economic principles which necessarily represent facts in the Economic life of the people and provide ways for the solution of the Economic problems, Hence, the collection of facts of Economic in nature and the laws made thereof make Economics a science.
Not only this, Economics is both positive as well as a normative science. This is so because in Economics we not only state the facts of Economic in nature as they are but we also explain how the facts ought to be in the Economic life. For example, take Robbins definition of Economics once again “Robbins says that scarce resources are used in an alternative way in an attempt to satisfy unlimited wants”. This definition shows that Robbins wants Economics to be neutral between competing ends and also in the use of scarce resources. In this way, if the monetary resources will not are condemn directed it to on enjoy moral alcoholic basis. drinks Thus, or Robbins dances wants or some Economics thing of the to be sort, are/positive science in which facts are studied with neutrality and are accepted as they are. Like this, some other facts in Economics are the concept of marginal utility, the concept of marginal productivity. wage rate determination and the determination of an equilibrium price etc.The collection of all such facts make Economics a positive science. Although facts are facts but sometimes they are very bitter and force an economist to give his opinion on the situation. For example, when the large majority of people of a country are facing Economic problems like poverty, hunger, illiteracy and malnutrition and a few landlords are basking luxuries at the cost of humiliated masses, it becomes imperative for an economist to analyze the Economic situation of the country to express his honest opinion. Thus, when he advises the government to rationalize the allocation of resources by making suitable monetary and fiscal policies, he in fact makes Economics a normative science.
We know that economists are working in almost all ministries and departments of the government in the planning as Commission. advisers, The duty researchers of all these and economists investigators. is to In advice particular, the government they are employed on the most optimum allocation of resources so that the Economic problems of the country are solved. Thus, whatever they are doing is in fact normative Economics. History of Economic thought has revealed that Economics has never been only a positive science. Instead, it has always been both positive as well as a normative science because economists have always been advising the government on Economic issues. For example, Adam Smith upheld the concept of free enterprise economy and advised the government to maintain. Economic freedom of the people. Robert Malthus advocated population control. So much so that Lionel Robbins opposed restrictions on international trade. Thus Economics not only gives us the theories, but it also gives us insight to come up with suggestions for the solution of Economic problems. This clearly establishes that Economics is a positive as well as a normative science.
ECONOMICS AS AN ART : When Economics studies the facts with neutrality Economics is said to be a positive science. But, when suggestions are made to change the facts to achieve the desired objectives, Economics is said to be a normative science. And, when practical steps are taken to put the suggestions in practice, we see Economics as an art. Thus application of Economic policies makes Economics as an art. For example, the present Government in Pakistan is providing incentives to private investors with a view to boss! up the level of production in the country and also to solve the Economic problems of the peoplé.
Economics as a positive science tells us what the facts are. Economics as a normative science explains how the facts ought to be? For example, Labour Economics being taught in a science Which deals with human beings and their Economic activities.