Question

How did John Maynard Keynes define economics?

Short answer

Keynes defined economics as a way of seeing world in models and applying the relevant models to the real world.

Step-by-step solution

Concept introduction

The study of economics is concerned with how firms, societies, households, governments, and people allocate their limited resources. It's not only about money; it's about making choices and decisions in areas like business, social, family, and individual decisions while keeping scarcity in mind. As a result, economics provides useful information for making well-informed decisions on the optimal distribution of resources in society.

Explanation of solution

We consider John Maynard Keynes (1883–1946) to be the most prominent economists of the twentieth century.

According to Keynes, economics is a procedure rather than a philosophy.

He considered economics to be more than a subject area, but rather a "method of thinking or a mental apparatus that aids its user in drawing proper conclusions."

Keynes defined economics as a way of seeing world in models and applying the relevant models to the real world.