Subject matter — the classical four divisions plus the modern two:
| Classicaldivision | Studies | Modern additions |
|---|---|---|
| Consumption | how households decide what to buy (demand, utility — Unit 2) | Growth & development (Unit 4) |
| Production | how firms convert inputs into output (costs — Unit 3) | Public finance — taxation, budget (Unit 5.5) |
| Exchange | how goods reach buyers (price, markets — Units 2–3) | International economics — trade, remittances (Unit 5) |
| Distribution | who receives what (wages, rent, interest, profit; inequality — Unit 4.5.2) | Monetary & macroeconomics — money, inflation, employment |
Nature of economics:
1. A social science — studies human behaviour in systems (not atoms: people respond to study);
2. Both science and art — science (explains, predicts) and art (applies principles to policy);
3. Positive and normative — positive statements describe what is ("the deficit is 5% of GDP"); normative statements prescribe what ought to be ("the deficit should fall"). Exam favourite: keep the two apart — courts and constititions traffic in normative claims, economists supply positive evidence;
4. Increasingly mathematical and empirical — models, data, econometrics; but its findings are tendencies, not laws of physics ("ceteris paribus" — other things equal — is the discipline's honest asterisk).