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One might find the concepts of economy and economics interrelated, although their meaning is different. Economics deals with concepts of production, consumption, distribution of products and services. Economics evaluates or explains the activities of humans. The underlying assumptions like optimal utility and rational behaviour of the consumer are considered.
The main component of economics is studying labour and trade relations. Although, the economy is related to processes and practices of efficient utilisation of resources. The concept of economy is divided into many types, including free market, command and mixed. It is an interrelated activity that helps to determine resource allocation and scarcity.
Economics
Economics studies the allocation of resources for producing, distributing and consuming collectively and individually. The behavioural study of consumers and producers at a minor level or individual level is microeconomics.
On the contrary, macroeconomics examines studies on regional, national and international contexts. It is based on assumptions for creating incentives to maximize optimization. Hence, it considers efficiency in processes of production, exchange and distribution.
The professionals that work in this social science branch are known as an economist. They publish major indicators like GDP CPI that measure the economy’s performance as a whole. Economics deals with problems that every human being possesses unlimited desires. This leads to propounding concepts like production, using resources efficiently and others which helps to achieve higher standards of living.
Economy
The economy is the vast domain for conducting activities, production and consumption, which also aids to allocate scarce resources. The production and consumption are used to meet the needs and requirements. The market-based economy ensures the free flow of goods throughout the market in alignment with supply and demand.
The decision of such economic activities is made by combining market transactions. The decision making can be collective or might be in a hierarchy. The decision-making processes are only completed if entities like families and governments actively participate.
Also, the economy of any region is highly influenced by culture, laws, historic background and others. Besides, the economy generally evolves due to choices made and actions undertaken by different participants.
Free market economies help direct and free exchange amongst the producers and consumers in alignment with demand and supply. This provides power to producers and consumers for determining price and production. Such a type of economy highly prevails in the United States of America.
The producers own and decide the prices, and the consumers are empowered for purchasing decisions and their willingness to pay. However, the decisions are only determined through supply and demand law.
Difference between economy and economics
One might not find profound differences between the two concepts as it is an interrelated process that helps achieve a high standard of living and conduct various welfare activities. It is essential to understand that any economic activity is a vital part of infrastructure as the barter system is replaced with monetary exchange.
Not many can understand the differences or interrelationships between economics and economy concepts. In simpler terms, economics studies structure, working performance, issues within the economy. It evaluates the system decisions and the participation of individuals, families and others. The economy will indicate any region or country that concerns production and consumption.
Conclusion
Economics is a theoretical approach that studies the efficient utilisation of resources. One cannot define any particular definition for economics as it studies rational choices taken by humans. On the contrary, an economy usually denotes economic conditions. Economy by its name depicts money related concepts, although it is not the only thing that guides the economy. It deals with routine activities; hence both economics and economy plays a vital role. Both the concepts help to generate monetary value and raise standards of living.
