What’s the difference between economy and economics?
Economy comes from a Greek word meaning household management.
One definition (from investopedia.com) is that economy is ”a complex system of interrelated production, consumption, and exchange activities that ultimately determines how resources are allocated among all the participants”. A government may look at different ways to stimulate the economy.
Another definition of economy is careful management of available resources. We can talk about the fuel economy of a car.
(You can read about the adjectives economic and economical here.)
According to wikipedia.org, economics is “the social science that studies the production, distribution, and consumption of goods and services”. Economics focuses on how economies work.
Adam Smith, ”the father of economics”, defined economics as the science of wealth.
Economics is usually divided into two disciplines:
Macroeconomics looks at how the economy as a whole works, how economies grow, change, and go through cycles. This can be about inflation, unemployment rates, monetary policy, foreign trade, etc.
Microeconomics looks at how supply and demand change over time, how people and businesses work, how people react to changes in prices, and how they make financial decisions.
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