Boy oh boy, this is a monstrous topic. Welcome to my post titled, economics. On this page, I plan to cover the basics of economics. I’ll explain what it is and why I think economics is an interesting subject. I don’t plan to go too deeply into this subject because I will probably be writing for 50 years or more and still only be scratching the surface. Plus I can’t imagine a post on economics written in great detail being interesting to read (for most of us). So consider this your basic overview.
In the most general sense, economics is the study of production, distribution and consumption of goods and services in an economy. A person who studies economics is called an economist. Putting it all together, an economist is a person who studies and assesses the production, distribution and consumption of goods and services in an economy.
In an economy, production of goods and services are vital for economic growth and prosperity. And because no economy has an absolute abundance of resources at its disposal, an economy must economize. An economy has to allocate the scarce resources it has toward goods and services it deems worthy. As to how an economy deems which scarce resources are allocated to which goods and services depends on the type of economy. Economics is the study of the allocation of those scarce resources. Once goods and services are created, it must be distributed to consumers. When the goods and services reach the consumers, the goods and services are consumed. Every step, from production to distribution, distribution to consumption is important for an economy. Economics is the study of those steps.
Macroeconomics and Microeconomics
The study of economics is divided primarily into two major sub categories, macroeconomics (meaning ‘large economics’) and microeconomics (meaning ‘small economics’). Macroeconomics covers the economics of an economy as a whole (that’s why its called ‘large economics’) and involves the implementation of economic statistical data like the unemployment rate, inflation (deflation), gross domestic product and other board based economic data that help economists determine how the overall economy is doing, among other things.
Microeconomics is the inverse. It is the sub category of economics that covers smaller aspects of an economy. More specifically, it is the study of how groups of producers and consumers make choices on how to use scarce resources like money and other assets to buy and sell of goods and services. Based on that data, economists are able to make an assessment on current and future prices of goods and services in a market, as well as assess the supply and demand for goods and services in their respective markets.
Pretty interesting huh? Economics is a very interesting subject because it allows one to gain insight on the status of an economy. If you have an idea as to what an economy’s economic situation is, now and in the future, you will be able to take advantage of unique opportunities that arise. You may find great investment opportunities based on the state of the economy through the study of economics.