Imagine living in a world in which there are infinite amounts of goods and resources to satisfy every human desire. People will not find need to budget their limited incomes, businesses will not worry about the cost of labor, and governments will not have reason to tax its citizens, or give importance to environmental issues. People living in this society will be equal to one another and everything would be free, like water in the ocean and sand in the desert. All prices would be zero and society will not find need for markets or financial institutions. Unfortunately we do not live in a utopia of limitless possibilities; we live in a scarce world of unlimited wants. Given unlimited wants, we must make the best use of our limited…show more content… He also acknowledged the Division of Labor to be one of the many properties of efficiency in markets, and believed economic benefit comes from the self-interested actions of individuals.
Another major field, concerned with the overall performance of the economy, is named Macroeconomics. This field was incepted in its modern form in 1936 when John Maynard Keynes published The General Theory of Employment, Interest and Money; during the time that The United States and much of the world were stuck in the Great Depression of the 1930s. Keynes, on a one-man war against classical theory, argued that aggregate expenditures determined the levels of economic output and employment. He stated when aggregate expenditures are high, the economy would foster business expansion, higher incomes, and high levels of employment. Contemporarily, Macroeconomics studies a wide range of areas from how central banks manage money and interest rates to the determinants of financial crises.
Economists, on a search for economic understanding, also use a scientific and mathematical approach. It involves observing economic affairs and drawing upon statistics on historical records in order to understand complex phenomena like impacts of budget deficits or causes of inflation. This technique is known as