Why does this site talk about economics? According to the Department of Economics in theUniversity of Illinois, Economics is the study of how governments, societies, households, businesses and individuals allot their resources. It doesn’t necessarily mean that you have to learn a course in economics in order to learn more about economics. It is only when you want to delve deeper and want to work closely in the economy that you need to study about it. However, it is highly recommended that people are aware of economics. It doesn’t matter whether you are old or young – as long as the basics are taught well.
This is the general part of economics, wherein it is presented with 2 main streams – Macroeconomics and Microeconomics. The latter deals with the behavior of customers, pricing, margins, incentives and much more. The former deals with the larger part of things and the broad economies like GDP or Gross Domestic Product, interest rates and many other things that you commonly see in the newspaper’s business column. This is the column that the average newspaper reader skips because the figures are too complex to understand. Most of those who can get this section are those working closely in business, knowledgeable and interested in the general economy. Macro is widely used by the investors, while Micro is highly user for managers.
Whenever an individual has more of something particular the use of it for them diminishes. See it in this kind of situation – a hundred dollar would turn to be more valuable if you get to earn a thousand dollars per month compared to earning a million a month. You can find this used a lot in thesetting of prices.
Law of Supply and Demand
This is thefoundation of economics. In fact, this is taught at schools as a basic introduction to the students to economics. Not all schools delve deeper into this subject. Whenever a supply of particular something increases, its price goes down. And when a supply of something decreases, the price goes up. This is evident when you are into any kind of business. When your business has an excess production of a product such as corn, the prices on food decreases. When the opposite happens, the price increases, too. Even those who are not knowledgeable about economics know the law of supply and demand by heart.
Gross Domestic Product
Also known by its acronym GDP, this is the underlying measure of the economy’s size. In concept, this is equal to the sum of the people’s incomes in the country or it can also be the sum of the entire market value of services and goods that are produced by the country. In terms of GDP as of this writing, US has the biggest with $14 trillion. It means this is the value produced by the country every year. China is the second largest GDP, followed by Japan, Germany, United Kingdom, France, India, Italy, Brazil, and Canada at the tenth position.