What Is Economics [PDF]

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WHAT IS ECONOMICS? Economics is the study of how people choose to use resources. Resources include the time and talent people have available, the land, buildings, equipment, and other tools on hand, and the knowledge of how to combine them to create useful products and services. Important choices involve how much time to devote to work, to school, and to leisure, how many dollars to spend and how many to save, how to combine resources to produce goods and services, and how to vote and shape the level of taxes and the role of government. Often, people appear to use their resources to improve their well-being. Well-being includes the satisfaction people gain from the products and services they choose to consume, from their time spent in leisure and with family and community as well as in jobs, and the security and services provided by effective governments. Sometimes, however, people appear to use their resources in ways that don't improve their well-being. In short, economics includes the study of labor, land, and investments, of money, income, and production, and of taxes and government expenditures. Although the behavior of individuals is important, economics also addresses the collective behavior of businesses and industries, governments and countries, and the globe as a whole. Microeconomics starts by thinking about how individuals make decisions. Macroeconomics considers aggregate outcomes.

What is the use of economics in an ordinary mans Life? The study of economics will provide you with at least four thinking and life skills. 1. Economics provides us with a classification system for economic phenomena, and thus a valuable way of thinking about the world. For example, most of us have had a notion of a good's price ever since we started buying things. However, economics teaches us the concept of all prices in an economy through the concepts of aggregate expenditures and gross domestic product (GDP). There are other total aggregates for any economy that are important to compare year to year—the total number of employed, the total number of unemployed, the total number in the working-age population, the total number in the labour force, and many other macroeconomic statistics. A study of microeconomics provides the student with a thorough knowledge and some key working tools concerning how individual units of the economy function, while macroeconomics provides the student with a knowledge base and some tools to understand how an entire economy functions. Without such knowledge, it would be difficult to classify economic phenomena and think conceptually and logically about economic matters. 2. Economics gives us some valuable working tools to analyze how an economy is performing, or underperforming. We can compare year over year real GDP, for example, by adjusting nominal GDP (the total expenditure on goods and services in any economy, and total incomes) downward to allow for increases in the price level. Thus we can measure economic expansion in any economy by continuous increases in the real GDP or measure a recession, which is defined as two successive declines in real GDP. Whether you are a businessperson, a macroeconomics student, a business analyst, you need such concepts to measure an economy's performance. Without these valuable tools in microeconomics and macroeconomics, we would lack a common framework of analysis of economic performance. 3. Economics teaches us how to more intelligently read about and evaluate our society, economy, and its policy-making processes. The Canadian Liberal Party claims that they are the best political party to govern the country. In a democratic

country, this is for the electorate to decide. Al Gore, the Democratic candidate for President in the 2000 U.S. election, ran his campaign on the same premise. It is not easy to appraise these claims, but a knowledge of economics helps a voter to become more informed about economic management issues in society (and they are frequently intertwined with political structures and issues), and to assess critically what political leaders have to say in any situation. An example of such a critical appraisal of events in the U.S. and Canadian economies in the first part of 2001 follows. 4. Economics teaches us how to develop an awareness of the potential of the growing integration of the world economy. Business has been vastly changed in recent years. The effects of computer use have been felt in all sectors, from automobiles to finance and banking. Vast new markets have been opened up through e-commerce. Markets themselves, once thought of as involving direct, usually face-to-face interaction between seller and buyer, are changing in nature. New markets have greater scope and are more anonymous in nature. For the right kind of business people, they are also more lucrative. Businesses can now reach markets with information never before possible. A person with the right qualifications in Sri Lanka or Taiwan can shop for a job in New York. Students doing research have access to an array of helpful research materials not just in general subject areas, but right down to specific topics. Economics is a part of life as if learned and applied in the right manner can benefit you on a large scale .Economics does not only improve economic skills but also life.