Meaning and Definitions of

Economics

MEANING OF ECONOMICS:
The word Economics originates from the Greek work
Oikonomikos which can be divided into two parts:
(a) Oikos, which means Home, and
(b) Nomos, which means Management.
Thus, Economics means Home Management. The head
of a family faces the problem of managing the
unlimited wants of the family members within the
limited income of the family. In fact, the same is true
for a society also. If we consider the whole society as a
family, then the society also faces the problem of
tackling unlimited wants of the members of the society
with the limited resources available in that society. Thus,
Economics means the study of the way in which mankind
organize s itself to tackle the basic problems of
scarcity. All societies have more wants than resources.
Hence, a system must be devised to allocate these
resources between competing ends.

DEFINITIONS OF ECONOMICS
We have now formed an idea about the meaning of
Economics. This at once leads to a general definition of
Economics. Economics is the social science that studies
economic activities. This definition is, however, too broad.
It does not specify the exact manner in which the
economic activities are to be studied. Economic activities
essentially mean production, exchange and consumption
of goods and services. However, with the progress of
civilisation, the complexity of the production, exchange
and consumption processes in society have increased
manifold. Economists at different times have emphasised
different aspects of economic activities, and have arrived
at different definitions of Economics. We shall now
discuss some of these definitions in detail.
These definitions can be classified into four groups:
1. Wealth definitions,
2. Material welfare definitions,
3. Scarcity definitions, and
4. Growth-centered definitions

Positive and Normative

Positive

What is 'Positive Economics'

Positive economics is the study of economics based on objective
analysis. Most economist today focus on positive economic
analysis, which uses what is and what has been occurring in an
economy as the basis for any statement about the future. Positive
economics stands in contrast Normative economics, which uses
value judgments.

BREAKING DOWN 'Positive Economics'

Unlike normative economics, positive economics focuses on
causes and effects, behavioral relationships, and facts involved in
the evolution and development of economic theories. Positive
economics is often called the "what is" economics. On the other
hand, normative economics is referred to as the "what should be"
or "what out to be" economics.
An example of a positive economic statement would be:
"Increasing the interest rate will encourage people to save." This
is considered a positive economic statement because it does not
contain value judgment and its accuracy can be tested. Most of
the information provided by the media is a combination of positive
and normative economic statements or theories. Because of this,
investors should understand the difference between objective and
subjective analysis.

Another example of a positive economic theory would be the way

it describes how government impacts inflation by printing more
money. In this example, positive economic theory plays a role in
providing facts and behavioral relationships between inflation and
money supply growth. However, it does not give any advice or
instruction on how to properly follow the policies involved in
inflation and money printing.

The Importance of Positive Economics:

It is important to be aware of the differences between positive
economics and normative economics, because the differences
provide better policy making when tied with normative economics.
Positive economics and normative economics working together
provide a clear understanding on public policies because they
highlight both factual statements and analysis based on opinions
which drive market behavior. However, a clear understanding of
positive economics leads to better decisions regarding economic
policies since positive economic is not dependent on value
judgement. Statements driven by positive economics can be
defined and tested and thus provide a clear cause-and-effect
streamline that can help individuals and economies make
important decisions.

Positive Statements
Positive statements provided by positive economics are objective.
These statements can be clearly defined and tested, or rejected
and amended, depending on the evidence available. Some
examples of positive statements include: "Lowering the price of
cigarettes has increased the demand for cigarettes among
teenage consumers," "the rise of crude oil prices lessens the use
of cars and increases the demand for bicycles," and "brewer
profits will drop if the government taxes alcohol."

What is 'Normative Economics'

Normative economics is a perspective on economics that reflects
normative judgments or opinionated reactions toward economic
projects, statements, and scenarios. Unlike positive economics,
normative economics heavily concerns itself with value judgments
and theoretical scenarios and economic statements that present
"what ought to be" rather than facts and cause-and-effect
statements. Normative economics expresses judgments about
what may result of economic activities if public policy changes are
done.

BREAKING DOWN 'Normative

Economics'
Normative economics aims to determine people's desirability or
the lack thereof to economic programs, situations and conditions
by asking what should happen or what ought to be. Normative
statements typically present an opinion on economic statements
rather than an objective analysis that presents facts.
As positive economics describe economic programs, situations
and conditions as they are, normative economics aim to prescribe
solutions. Normative economic statements are used to determine
and recommend ways to change economic policies or to influence
economic decisions.

Pairing Normative Economics With

Positive Economics
Normative economics may be useful in establishing and
generating new ideas from different perspectives, but it cannot be
the only basis for making decisions on important economic issues
as it does not take an objective angle that focuses on facts and
cause-and-effects.

Economic statements coming from the positive economics angle

can be broken down into determinable and observable facts that
can be examined and tested. Because of this characteristic,
economists and analysts often practice their professions under
the positive economic angle. Positive economics, being the
measurable perspective, helps policy-makers and other
government and business authorities to decide on important
matters that affect particular policies under the guidance of factbased findings. However, policy makers, business owners and
other organization authorities also typically look at what is
desirable and what is not for their respective constituents, making
normative economics an important part of the equation when
deciding on important economic matters.
Paired with positive economics, normative economics can branch
into many opinion-based solutions which mirrors how an
individual or one whole community portrays particular economic
projects. This kind of views are especially important for policy
makers or national leaders.

Examples of Normative Economic

Statements:
An example of normative economics would be, "We should cut
taxes in half to increase disposable income levels." By contrast, a
positive or objective economic observation would be, "Big tax cuts
would help many people, but government budget constraints
make that option infeasible." The provided example is a normative
economic statement because it mirrors value judgments. This
particular judgment assumes that disposable income levels must
be increased.
Economic statements that are normative in nature cannot be
tested or proven for factual values or legitimate cause and effect.
Samples of normative economic statements include "Women
should be provided higher school loans than men," "Laborers
should receive greater parts of capitalist profits," and "Working
citizens should not pay for hospital care." Normative economic
statements typically contain keywords such as "should" and
"ought."

The Trend of
Introduction: The gross domestic product (GDP) is one
the primary indicators used to gauge the health of a
country's economy. It represents the total value of all
goods and services produced
o v e r a s p e c i fi c t i m e p e r i o d & i t c a n b e t r e a t e
d a s t h e s i z e o f t h e e c o n o m y. N o w economy of
Bangladesh is composed of three main sectors----Agriculture, Industry and Service.GDP of Bangladesh
has shown up going trend for last 50 years & there
are three majorsectors have played vital role in that.

GDP growth Rate

Bangladesh
Bangladesh Growth Experience Trend
in GDP Expansion:
Bangladesh economy has been experiencing steady acceleration in
economic growth over the last several decades (Figure 1). Thus, the
average rate of GDP grew from less than 4% per year during 1970-90 to
4.8% in 1990-2000; to 5.8% in 2001-2010 and then surged to 6.4% in
2011-13 (the first three years of the Sixth Five Year Plan). This is the
remarkable achievement.

GDP In Bangladeshi Taka

This is a chart of trend of gross domestic product of Bangladesh
at market prices estimated by the International Monetary Fund
with figures in millions of Bangladeshi Taka. However, this reflects
only the formal sector of the economy.

Year

Gross Domestic Product (Million US Dollar

Taka)
Exchange

Inflation
Index
(2000=100)

Per Capita
Income
(as % of USA)

198
0

250,300

16.10 Taka

20

1.79

198
5

597,318

31.00 Taka

36

1.19

199
0

1,054,234

35.79 Taka

58

1.16

199
5

1,594,210

40.27 Taka

78

1.12

200
0

2,453,160

52.14 Taka

100

0.97

200
5

3,913,334

63.92 Taka

126

0.95

200
8

5,003,438

68.65 Taka

147

201
5

17,295,665

78.15 Taka.

196

2.48

This paper looks at past growth experience of Bangladesh

and identifies the sources of growth moving forward to
2030. The paper notes that Bangladesh has made
impressive progress in increasing total and per capita
GDP over the past 40 years. Per capita income has grown
from $100 in 1974 to $850 in 2013. Nevertheless, this
performance is below the potential and much lower than
growth rates achieved by China, Malaysia and Korea. In
1974 these countries were also low income countries like
Bangladesh (albeit at higher end). Today Malaysia and
China are at the higher end of the middle income group
while Korea has crossed over the high income category.
Bangladesh is still at low income country group and is
aspiring to enter the low-end of middle income by 2021.
There is no reason why Bangladesh cannot achieve a
higher growth rate than presently, as envisaged in the
Perspective Plan. The paper provides evidence of the
sources of growth in the past, policies that supported the
growth expansion and constraints that hamper a faster
pace of growth. It identifies policies and institutional
reforms that will help improve Bangladeshs future growth
prospects. The paper concludes that policy efforts will
need to focus on the traditional sources of growth (capital
accumulation, labor growth, human capital and
technology) while also paying attention to improving the
efficiency of resource use through trade and investment
deregulation and addressing the governance and
institutional constraint. Policies that promote efficiency
and improve governance and institutions are particularly

Summary and
important to increase the contribution of total factor
productivity growth.