Economics is a social science that studies the broader management of goods and services, including their production and consumption, and also the factors affecting them whereas Finance is the science of managing available funds. while finance manages funds. Finance vs economics
Economics vs. Finance comparison
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Economics Finance, Definition
Economics investigates production
consumption, and the forces that effect them.Finance involves managing time, money, and risk.
Branches
Macro and micro economics exist.
Finance includes personal, business, and public.
Management economists counsel for businesses and governments. Families and banks handle finances.
Similar Courses Economics, Law, and Politics.
Accounting, CFA, and Other Subjects
Economics explains how scarcity or abundance of products and services influences practically every aspect of society, industry, and government.
Finance is mostly about saving and lending money, considering time, cash, and risk.
Hence, finance is an economic cousin.
Finance vs. Economics branches
Macroeconomics and microeconomics are economics.
Macroeconomics considers national income, output, unemployment, inflation, and government monetary and fiscal policies.
Microeconomics studies product supply and demand.
Market studies investigate demand and supply to attain equilibrium at a price point under government rules.
How this equilibrium adjusts with shifting marketplaces affects economic efficiency.
Personal, commercial, and public finance are important.
Personal finance includes income, expenses, and debts.
Public finance manages and funds government and collective activities.
Corporate or commercial finance involves managing funds.
To optimize firm wealth and stock market value, balance risk and profitability.
Economics and finance’s evolution
Economic philosophy comprises three periods: premodern, early modern, and modern.
Premodern civilizations include Mesopotamia, Chinese, Indian, Greek, Arab, Persian, and others.
Chanakya’s “Arthashastra” (c. 340-293 BCE) is one of the most important works in economics.
Physiocrats and mercantilists emerged in the 16th–18th centuries.
The former held the belief that a nation’s riches could be measured by the amount of gold and silver it possessed, whereas the latter believed that a nation’s wealth could be measured by the amount of agricultural productivity it had.
Adam Smith defined modern classical economics in 1776.
He believed an ideal economy was self-regulating and that individual interests benefited society.
Marxism, based on Karl Marx (1867), held that an item’s value was determined by its labor.
Classical economics influenced this neo-classical theory.
Between 1870 and 1910, neoclassical economy or marginalism held that supply and demand determined product price and quality.
Keynesian economics focused on macroeconomics, and the Chicago school refined Adam Smith’s ideas.
The Saltwater school (Harvard, MIT, Berkeley, Pennsylvania, Yale, and Princeton) and Freshwater school dominate modern economics (represented by Chicago School of Economics, Carnegie Mellon University, University of Rochester and University of Minnesota).
Both schools follow the neo-classical synthesis.
Economics influenced finance theories.
In the past, economists did not conduct research on financial markets.
Irving Fisher, John Maynard Keynes, John Hicks, Nicholos Kaldor, and Jacob Marschak founded Financial Theory. Modern Portfolio Theory, Arbitrage and Equilibrium Theory, etc.
Roles vary
Consultant economists work in banking and finance and government institutions like the Treasury and Central Bank.People are in charge of their own personal finances, whereas commercial and public finances are managed by banks and other institutions.
Economics vs. finance degrees
Economics courses include Philosophy of Economics, Laws and Economics, Political Economy, and more.Accounting, CFA, business, and other financial courses are related.
