OUTLINE OF PURE POLITICAL ECONOMY
Pure Political Economy is a branch of economics and social sciences concerned with the production and consumption of goods and services and the allocation of resources in an economy. It studies how individuals, businesses, governments, households, and social institutions make decisions about fulfilling economic needs and wants, and how those decisions affect economic growth, employment, and the distribution of goods and services.
The fundamental assumption of Pure Political Economy is that the economy is a complex system where all parts interact with each other. In this system, decisions are made according to certain rules, which are based on the available information and preferences of the decision makers. Pure Political Economy studies the rules of the game, how decisions are made, and how these decisions affect the outcomes.
Pure Political Economy is divided into two main fields: microeconomics and macroeconomics. Microeconomics focuses on the behavior of individual actors in the economy, i.e. how households, firms, and governments decide how to allocate their resources. Macroeconomics looks at the broader picture, studying how those decisions interact with each other and how they affect the overall performance of the economy.
Within both fields, there are various theories and models employed to analyze and predict economic activity. For example, in microeconomics, the neoclassical school of thought utilizes the foundational concepts of supply and demand to explain prices for goods and services. In macroeconomics, the Keynesian school of thought emphasizes the role of government in stabilizing the economy.
Pure Political Economy also covers how governments intervene in the economy through fiscal and monetary policies. Fiscal policy involves taxing and spending decisions of the government, while monetary policy involves controlling the money supply and interest rates to achieve certain objectives such as inflation or economic growth.
Finally, Pure Political Economy also deals with the global economy, i.e. how trade and investments between countries can affect their economic performance and well-being. It looks at how international trade and capital flows interact with the domestic economic policies of individual countries and how this affects macroeconomic indicators such as economic growth and unemployment.
In conclusion, Pure Political Economy is a diverse field of study that looks at the economic decisions of individuals, businesses, governments, and society at large, as well as the policies that governments implement to achieve economic stability and growth. It is used to predict and analyze economic activity, to understand the functioning of macroeconomic indicators, and to explore the implications of international trade and capital flows on global economies.
