Macroeconomics

Macroeconomics is the part of the economic theory that is responsible for overall review of the economy in terms of total goods and services produced, total income, the level of employment, productive resources, and general behavior prices. Macroeconomics can be used to analyze what is the best way to influence policy objectives such as making the economy grow, achieve price stability, promoting jobs and obtaining a balanced and sustainable balance of payments. Macroeconomics for example, focuses on the phenomena that affect the indicator variables of living in a society. In addition objetiza analyzer further the economic situation of their own country where you live, allowing to understand the phenomena involved in it. In contrast, microeconomics studies the economic behavior of individual agents, as consumers, businesses, workers and investors.

Microeconomics

Microeconomics is defined as a problem of allocating scarce resources in relation to a number of possible purposes. The logical consequences of this problem lead to the study of economic behavior of individual consumers and firms as well as the distribution of production and income among them. Microeconomics is the basis of modern economic theory, studying their fundamental relationships.

Families are considered suppliers of labor and capital, and that demand for consumer goods. Firms are considered applicants for employment and production factors and product suppliers.

Consumers maximize utility from a given budget. Firms maximize profit from cost and revenue potential.

Microeconomics seeks to analyze the market and other mechanisms that establish relative prices between goods and services, allocating resources to alternative modes of which certain individuals have organized a society.

Microeconomics is concerned to explain how it raised the price of final products and factors of production in equilibrium, usually quite competitive. It is divided into:

Consumer Theory: Study of consumer preferences by analyzing their behavior, their choices, values and restrictions on market demand. From this theory determines the demand curve.
Theory of the Firm: Study the economic structure of organizations whose goal is to maximize profits. Organizations that buy it for factors of production and sell the product of these factors of production to consumers. It studies market structures, both competitive and monopolistic. From this theory determines the supply curve.
Production Theory: Study the process of transforming the company acquired factors in end products to the market. Studies the relationships between the variations of factors of production and its consequence in the final product. Determines the cost curves, which are used by firms to determine the optimum amount of the bid.
Microeconomics explains the market practices, which are divided into: Monopoly, Monopsony, Oligopoly, oligopsony, Perfect Competition and Monopolistic Competition.

Physiocratic Theory

Physiocracy or physiocratic was a school of eighteenth-century economic thought founded by François Quesnay, Anne Robert Jacques Turgot and Pierre Samuel du Pont de Nemours in France. Affirmed the existence of a natural law by which the proper functioning of the economic system would be secured without government intervention. His doctrine is summarized in the phrase laissez faire. The origin of the term physiocracy comes from the Greek and means "rule of nature", considering the Physiocrats that human laws should be in harmony with the laws of nature. This is related to the idea that only the nature of agricultural activities enables the product obtained is greater than the inputs used in production thus resulting in an economic surplus. The Physiocrats described as sterile as manufacturing activities or the shop where the seizure would be sufficient to replenish the inputs used.

Theory

Physiocracy emerges as an intellectual-type reaction to the common conception of life interventionist mercantilist thinking. They insisted that the intervention of intermediaries in various stages of production and distribution of goods tends to reduce the overall level of prosperity and economic production. Examples of these interventions were many but the Physiocrats were fixed on government controls such as monopolies, excessive taxation, bourgeois, parasitic, and European feudalism. These practices were associated with commercial corporatism or excessive emphasis on industrial growth, which were and are based on the restrictive private interest. And to deepen the differences studied funds, as advocated a single tax on land and suggested the cancellation of all established by the mercantilist. The general trend of the Physiocrats is free trade. The task of the economist is reduced to find the set of natural laws. State intervention is futile, because that would not otherwise interfere with the essential order. The interest of the Physiocrats concentrated largely on the definition of a macroeconomic strategy for development that includes consistent policies. It is the first movement that adopts a systematic approach to economic theory. It was believed that if this law was considered and amended, would lead to harmonious and beneficial conditions for all mankind. Physiocracy applies to the whole concept of a government, not necessarily the only economic activity. Because the parents of this political theory saw economic progress as inseparable from social progress, arguing that thanks to increased prosperity natural rivalries competing groups will decrease because at the end of the day will cost more than it's worth.

History

If you can say that the system was implemented in history physiocracy between or after the eighteenth century, it certainly was not in the form of 'pure' theorists envisioned by its creators, but through detailed legislation that favored private Recommendations. Led to the period known as The Enlightenment. Reflections of a belief in natural law can be set in a countless number of areas, ranging from natural science to theories of constitutional order (Magill). In pre-revolutionary France, Anne Robert Jacques Turgot served as a member of the court of Louis XIV, the local administration of Paris, and wrote pamphlets and booklets on work-related issues: taxes, trade of grain, and money. Turgot argued that the wealth came from self-interest and markets are linked by flows of money (ie a cost to the buyer's revenue for the producer). Thus he realized that the fall in prices in times of shortage - common at the time - was dangerous economically as it served as a disincentive to production. Usually Turgot called for less government interference in the grain market, as any government activity would give birth to an event that would prevent the policy work. An example would be if the government bought corn abroad, there would be people who would realize that there is a likely shortage and price increase, so that prices could rise and could be a shortage. This idea was an early example of the adjustment to free trade. Published in limited areas, François Quesnay proposed a system known as "the dîme royale" which suggested a major simplification of the French tax code based on changes concerning only in property taxes and trade. During periods of about seven years of war between France and England, the movement of physiocracy began to grow. Several newspapers appeared, showing a growing audience in France the new economic ideas. Among them the most important was the Diaire Economique (1721-1772), which promoted agriculture and rational agriculture and diaire du commerce (1759-1762), who was greatly influenced by the Irish Richard Cantillon (1680-1734), and two dominated by Physiocrats, the newspaper de l'agriculture, du commerce and finances of DES (1765-1774). Jacques Vincent de Gournay (1712-1759) (who was the intendant du commerce) wrote Ephemerides du citoyen (1767-1772 and 1774-1776). Where condemning the exclusiveness of the trade unions, the multitude of taxes on land, and artificially set prices for raw materials, as grain. While the Physiocrats were able to change a lot of abuse legislation and introduced a plethora of ideas socio-economic-political, capitalist interests triumphed in the end given the predominant focus on industrial growth over agricultural (Whittaker).

Mercantilist Theory

One can understand the commercialism as a set of political or economic ideas developed during the sixteenth, seventeenth and eighteenth centuries the first half in Europe. It is characterized by a strong interference in the economy. It consisted of a series of measures to unify the domestic market and was aimed at the formation of nation states as strong as possible.

History

Almost all European economists between 1500 and 1750 are considered today as mercantilist. However, these authors did not see themselves as participants in a single economic ideology, but the term was coined by Victor Riquetti, Marquis de Mirabeau in 1763, and was popularized by Adam Smith in 1776. In fact, Adam Smith was the first person to formally organize many of the contributions of the mercantilist in his book The Wealth of Nations. The word comes from the Latin word mercari, that makes sense as the Castilian trade in the sense of conducting a business, and that comes from the root meaning merx merchandise. It was initially only used by critics to this theory, such as Mirabeau and Smith, but was soon adopted by historians.

Mercantilism itself can not be considered a unified theory of economics. In fact there was no mercantilist writers to submit a general outline of what would be an ideal economy, as Adam Smith would later to classical economics. Instead, the mercantilist writer tended to focus their attention on a specific area of the economy. would be after the mercantilist period when scholars who came later integrate the various ideas on what you would call mercantilism, such as Eli F. Heckscher who sees in the writings of the time both a political power system, a system of regulation of economic activity, a protective system and a monetary system with the theory of the trade balance. However, some theorists reject completely the idea of a mercantilist theory, arguing that it gives "a false unity to disparate events." The historian of economic thought Mark Blaug notes that mercantilism was rated over time as "annoying baggage", "fun of historiography" and "giant balloon theory."

Theory

The mercantilist thinking can be synthesized through the nine rules of Von Hornick:

1. Containing every inch of the soil of a country is used for agriculture, mining or manufacturing.
2. What all raw materials which are in one country are used in domestic manufacturing, for finished goods have a value greater than the raw materials
3. What are promoting a large and industrious population.
4. What prohibit all exports of gold and silver and that all domestic money remains in circulation.
5. What is no interference as much as possible all imports of foreign goods
6. Where some imports are necessary to be obtained first-hand, in exchange for national assets, and gold and silver.
7. as far as possible be confined to import the raw materials which can be completed in the country.
8. They are constantly looking for opportunities to sell the surplus of manufactured goods from one country to foreigners, to the extent necessary, in exchange for gold and silver.
9. Not allow any importation if the goods are imported to a sufficient and suitable in the country.

However, domestic economic policy that defends the commercialism was still more fragmented than international. While Adam Smith presented a mercantilism that supported the strict control of the economy, many mercantilist did not identify with these ideas. During the early modern era was the order of the day the actual use of patents and government imposed monopolies. Mercantilist Some were supportive, but others saw the corruption and inefficiency of those systems.

One of the elements in which they agreed was mercantilist economic oppression of workers. Employees and farmers had to live in the "margins of subsistence." The objective was to maximize production, without any attention to the consumer. The fact that the lower classes had more money, leisure, or education was seen as a problem to degenerate into little desire to work, damaging the country's economy.

Furthermore, scholars do not agree on why mercantilism was the dominant ideology or economic theory for two centuries and a half. One group, represented by Jacob Viner, argues that mercantilism was simply a straightforward system that had enough common sense. However, it was based on a series of logical fallacies that could not be discovered by people at the time, since they had the necessary analytical tools. Another school, supported by economists such as Robert B. Ekelund, understands that mercantilism was not a mistake, but the best possible system for those who developed it. This school argues that mercantilist policies were developed and implemented by retailers and governments, aimed at maximizing corporate profits. Employers will benefit greatly, and without them posed an effort by the imposition of monopolies, import bans and working poverty. Governments, meanwhile, benefited from the recovery of fees and payments for merchants. While the later economic ideas were often developed by academics and philosophers, almost all mercantilist writers were merchants or people in positions in government.

Definition of Economy

Philosopher Economics

The economy, for Aristotle, is the science that deals with the way they manage some resources or use existing resources to meet the needs that individuals and groups.

Its subject is the human activity and, therefore, is a social science. The social sciences differ from natural sciences, or that their claims can not be refuted or converted into a laboratory experiment and therefore use a different mode of scientific method. From here its complexity and high level of uncertainty, using approaches or at least defining the trend in the behavior of economic variables, it is risky venture to predict with accuracy close to 100%, the subject of study "the economic subject is highly dynamic and derived notions of what "should be", are typical of normative economics, and as such can not be tested. The economy is constantly moving between the two poles.

Economic science is always justified by the human desire to meet their own ends. This aspect of the definition proposed by Robbins is questionable and is probably the least developed in the history of economic analysis except, perhaps, by the Austrian School and especially for the production of other goods and services. This concept of cost, beyond the purely monetary concept is typical of economists and is known as opportunity cost. To allocate resources should be a criterion to start testing social and economic.

The economy as a science

Before defining the economy as a science is necessary to mention that in economics there are different points of view, according to the approach taken. However, two stand out: the objective approach and subjective approach, therefore, stand the objective definition and the subjective definition, which relate to two theories of value (objective and subjective, correspondingly).

Objective definition or Marxist
The classic definition of the current objective is to Friedrich Engels, who said: "The political economy is the science that studies the laws governing the production, distribution, circulation and consumption of material goods that satisfy human needs.." Karl Marx in turn indicates that the economy is "the science that studies the social relations of production." Also called "the science of sound administration", as opposed to financial considerations. The current objective is based on historical materialism, refers to the work-value concept, by which the objective value originates in the amount of work required to obtain the property. It is historic because it sees capitalism as a social form, or organization for a given historical moment. This definition has spawned a stream of economic thought that today is known as Political Economy.

Definition subjective or marginal
The classic definition of subjective orientation is Lionel Robbins, who says: "Economics is the science that deals with the study of the satisfaction of human needs through goods, being little, have alternative uses including the choice is" .

Systemic Definition
From another point of view the economy can be seen as an area of well-defined communication. This means that the economy is the medium in which economic systems are formed. In this perspective, economic systems are social systems in which communications are communications that are played on compensation or payments. Those communications that make economic sense, are reproduced in economic systems, those that make no sense, are rejected. This sociological view of the economy allows for the understanding of economics as an integral aspect of society.

What is Economy?

Economy (οiκος, which translates to house in the sense of heritage and νέμεωιν, manage) is the social science that studies the social relations that have to do with the processes of production, exchange, distribution and consumption of goods and services, understood such as means of satisfying human needs and individual performance and collective society. Other doctrines help progress in this study: psychology and philosophy attempt to explain how to determine the objectives, history records the change of targets in time, sociology interprets human behavior in a social context and political science explains the relationship power to intervene in economic processes.

Economic literature can be divided into two broad areas: microeconomics and macroeconomics. Microeconomics studies the behavior of individual economic agents, mainly businesses and consumers. The microeconomics explain how to determine variables such as prices of goods and services, level of wages, profit margin and income changes. The agents make decisions trying to get the best possible, ie maximize utility. Macroeconomics examines the aggregate variables, such as the total domestic production, production, unemployment, balance of payments, inflation and wages, understanding the problems of employment level and rate of production or income of a country .