Political Economy (General Economic Theory)

An economy (from Greek οίκος – "household" and νέμoμαι – "manage") is an area of the production, distribution, or trade, and consumption of goods and services by different agents. Understood in its broadest sense, 'The economy is defined as a social domain that emphasizes the practices, discourses, and material expressions associated with the production, use, and management of resources'. Economic agents can be individuals, businesses, organizations, or governments. Economic transactions occur when two parties agree to the value or price of the transacted good or service, commonly expressed in a certain currency. However, monetary transactions only account for a small part of the economic domain.

Political economy is the study of production and trade and their relations with law, custom and government as well as with the distribution of national income and wealth. Political economy as a discipline originated in moral philosophy in the 18th century and sought to explore the administration of states' wealth, with "political" signifying the Greek word polity and "economy" signifying the Greek word "okonomie" or "household management". The earliest works of political economy are most often attributed to British scholars like Adam Smith, Thomas Malthus and David Ricardo, although the case is sometimes made that the still earlier works of the French physiocrats constitute the true beginnings of the discipline.

A theory is a contemplative and rational type of abstract or generalizing thinking, or the results of such thinking. Depending on the context, the results might, for example, include generalized explanations of how nature works. The word has its roots in ancient Greek, but in modern use it has taken on several related meanings.