Example: Economics

Importance Of sparings al federal agencysyone is a activate of providence and everyone uses the rules of miserliness too. From the time we be born, we beat consumers of non-homogeneous products and utilitys (say, medical dish ups, baby foods, and so on). We grow and diversify to attain various diametric roles as producers, traders, mediators and agents. Todays world is that of economic imperialism, where economical factors, nearly consequenti every last(predicate)y, money dictates all the elements of the order of magnitude, non to forget close family relations. With recession wreaking havoc, economics is something which even up ignorant households ar learning.Economics is a science which deals with production, scattering and consumption of goods and services. Therefore, we sewer conclude that whatever involves transfer of money includes economics. There ar cardinal schools of economics, namely, microeconomics and macroeconomics. The combined results of these ii determine the actual effect of economics on people. To list all the important functions of economics would be literary impossible as newer issues keep creeping up. In the fol gloomying lines, we puzzle described some broad and basic functions of economics. Signifi skunkce Of Economics Optimizes Resource UsageIn todays world, the count of visions available to us is reducing each day. This condition will only worsen, if we keep utilise our resources with low efficiency and effectiveness. Economics provides a mechanism for looking at possible trends to optimize resource utilization and reduce wastages. Utilizes the Opportunity Cost This is a nonher principle employ for resources in which the scarce resources argon utilized efficiently, after calculating and checking the opportunity cost. A simple theory of exclusion is put into play. If you incur aim something all over another thing, then what loss you sustain is the opportunitycost.If we minimize the opportunity cost, we g et maximum profits. For example, a psyche who invests $10,000 in a stock denies himself the interest that could arrive been accrued, by leaving the $10,000 in the bank account instead. The opportunity cost of the decision to invest in stock, is the value of the interest. When this principle is apply in budget allocations by disposal, it results in best(p) ontogenesis pass judgments. Gains Social Efficiency If a society keeps on putting money into its rescue with no profits or loss, then the economy becomes wasteful and so does the society, as it gets dependent on the economy.If the input into an economy is larger than the output, then the society starts disintegrating and locomote prey to destructive social evils, want unemployment and poverty. The same is the case if the economy is stagnant. Understanding of economics leads to better think economy. similarly, profitable economic steps introduced largely aid in the societys overall prosperity. Stabilizes The Overall E conomy The stability of an economy is inevitable to every country or society. Only by economically sound practices tooshie we ensure that the economy is stable and growing at the same time.In novel times, when the worlds economy fell, only a few countries were able to sustain their growth rate and prevent severe monetary impacts on their citizens. Understands Individual Economics This is important for the growth of individuals economically. A person aims to understand the economic situations and stipulations present in his own life. He whitethorn not need the hardcore inborn understanding of economics, but he definitely needs to understand the economic practices that he must follow to eradicate chances of going broke or bankrupt.Also, understanding of economics helps in utilize the resources in the best possible delegacy and gaining maximum profit. What is Economics? A Definition of Economics Ever wonder why food costs rise when gas prices spike? Ever question why U. S. polit icians worry when other countries talk of going bankrupt? Ever wonder why you cant get a good interest rate on your savings account? All of these phenomena can be explained through economics. Economics is the story of the production and consumption of goods and the transfer of wealth to produce and reserve those goods.Economics explains how people interact indoors securities industrys to get what they want or accomplish certain goals. Since economics is a driving force of benignant interaction, perusal it often reveals why people and governances behave in cross ways. There be deuce main types of economicsmacroeconomicsandmicroeconomics. Microeconomicsfocuses on the actions of individuals and industries, like the dynamics among buyers and sellers, borrowers and lenders. Macroeconomics, on the other hand, takes a much broader view by analyzing the economic activity of an entire country or the inter provinceal marketplace.A study of economics can describe all aspects of a cou ntrys economy, such(prenominal) as how a country uses its resources, how much time laborers devote to extend and leisure, the outcome of investing in industries or financial products, the effect of taxes on a population, and why businesses succeed or fail. People who study economics are callight-emitting diode economists. Economists seek to answer important questions round how people, industries, and countries can maximize their productivity, create wealth, and have financial stability.Because the study of economics encompasses m some(prenominal) factors that interact in complex ways, economists have different theories as to how people and regimens should behave within markets. Adam Smith, know as the Father of Economics, established the first neo economic theory, called the Classical School, in 1776. Smith believed that people who acted in their own self-interest produced goods and wealth that benefited all of society. He believed that governments should not restrict or interf ere in markets because they could regu belated themselves and, thereby, produce wealth at maximum efficiency.Classical theory forms the basis of capitalism and is still prominent today. A second theory known as Marxism states that capitalism will eventually fail because factory owners and CEOs exploit labor to generate wealth for themselves. Karl Marx, the theorys namesake, believed that such exploitation leads to social unrest and class conflict. To ensure social and economic stability, he theorized, laborers should own and control the means of production. While Marxism has been widely rejected in capitalistic societies, its interpretation of capitalisms flaws remains relevant.A more recent economic theory, the Keynesian School, describes how governments can act within capitalistic economies to promote economic stability. It calls for reduced taxes and increased government spending when the economy becomes stagnant, and increased taxes and reduced spending when the economy becomes overly active. This theory strongly influences U. S. economic policy today. As one can see, economics shapes the world. Through economics, people and countries become wealthy. Because buying and selling are activities vital to survival and success, studying economics can help one understand piece thought and behavior.Branches of Economics Economics has two branches microeconomics and macroeconomics. Microeconomicsis the branch of economics that deals with the personal decisions of consumers and entrepreneurs. Its primary concern is to help consumers and investors sire their lives better by increase their earnings and satisfying their needs despite exceptional resources. Also included in its study are the consumers decisions on what products to buy and how the cost of commodities is determined. Macroeconomicsdeals with the larger aspects of a nations economy, such as the sectors of agriculture, industry, and service.It aims to (a) speed up the economys growth rate and increase to tal production (b) increase the rate of employment (c) keep the prices of commodities stable so that they remain affordable and (d) have sufficient reserves for foreign exchange for importing goods and paying onward loans. Economists help in solving problems like unfair wages, rapid population growth, people migration to city centers, gamey crime incidence, and loss of human resources due to overseas migration. Economic Methodology What is the difference surrounded by compulsory and normative economics?Positive economicsis objective and fact based, maculationnormative economicsis subjective and value based. Positive economic statements do not have to be correct, but they must be able to be tested and proved or disproved. Normative economic statements are opinion based, so they cannot be proved or disproved. While this distinction seems simple, it is not unendingly easy to differentiate between the positive and the normative. galore(postnominal) widely-accepted statements that people hold as fact are actually value based.For example, the statement, government should provide basic healthcare to all citizens is a normative economic statement. There is no way to prove whether government should provide healthcare this statement is based on opinions close to the role of government in individuals lives, the importance of healthcare and who should pay for it. The statement, government-provided healthcare increases public expenditures is a positive economic statement, because it can be proved or disproved by examining healthcare spending data in countries likeCanadaandBritainwhere the government provides healthcare.Disagreements over public policies typically revolve around normative economic statements, and the disagreements persist because neither attitude can prove that it is correct or that its opponent is incorrect. A clear understanding of the difference between positive and normative economics should lead to better policy qualification, if policies are made based on facts (positive economics), not opinions (normative economics). Nonetheless, numerous policies on issues ranging from international trade towelfareare at least partly based on normative economics.Deduction in Economics Deductive economics starts with a fructify of axioms about economies and how they work, and relies on these principles to explain individual cases or events. Supply and demand epitome, a staple in any introductory economics course, is an example of deductive reasoning because it involves a set of generally accepted principles about demand and supply. To summarize, deduction in economics starts with a generally accepted principle and carry on to the specific. innovation in EconomicsInductive reasoning in economics does the reverse of deductive reasoning namely, it begins with an individual problem or question and proceeds to form a general principle based on the evidence detect in the real world of economic activity. For example, an economist who a sks if a government program of public kit and boodle spending will stimulate a regions economy will proceed to research the issue, collect and break down data, and based on conclusions, form a general theory about the economic impact of pecuniary policies. Classification of economic resources? here are two types of economic resources a. Property resources b. human resources Human resourcesis the set of individuals who make up theworkforceof anorganization,business sectoror aneconomy. Human capital is sometimes used synonymously with human resources, although human capital typically refers to a more narrow view i. e. , the familiarity the individuals embody and can contribute to an organization. Likewise, other terms sometimes used include manpower, gift, labour/labor or simply people. The Four Factors of Production in EconomicsLand Land refers to the intrinsic resources that are available and used in the production of goods. For example, a heavy mining industry could not exist without the natural deposits of valuable minerals in the ground, while a thriving farming community would have a hard time surviving with poor soil and no rainfall. Labor Labor refers to the human inputs of work to produce the goods and services. For example, the training required for employees to successfully operate machines to produce cars would be considered as part of labor.In addition, the mental capacity to perform tasks and invent new products is also part of labor. The only human element not included in labor is entrepreneurship. Capital Capital refers to the tools and machines that are required for the production of the product. For example, when making cars, the capital would include the factory and all the machinery in the factory used in making the car. On a farm, the capital would include the tractors, harvesters and other equipment used to grow crops or raise livestock. EntrepreneurshipEntrepreneurship refers to the economic motive for an individual to attempt to ma ke a profit from an idea. For example, people may know how to build cars, machines may be available and the land for the factories for sale, but it takes an entrepreneur to put those factors together in an attempt to make a profit. Entrepreneurs put their own resources at stake by personally investing in the company. For example, a business owner is not paid an hourly wage like the people who work for her. Instead, her income depends on the success or failure of the business venture. production possibility curveA graphicalrepresentationof the alternativecombinationsof theamountsof twogoodsorservicesthat aneconomycanproduceby transferringresourcesfrom onegoodorserviceto the other. Thiscurvehelps in determining whatquantityof a nonessential good or a service an economy canaffordto produce without jeopardizing therequiredproductionof anessential goodor service. Also calledtransformation curve. What are the three basic economic problems? the basic economic problem is the unbounded want s and needs of human which results to scarcity of resources. what are the needs? the needs are the things we must posses in order to survive like food,water, clothing,shelter. while the wants are those things that human would like to have in order to improve there office in life. we limited resources thata why encounter this problem. the economic resources like land, labor,and capital which are the factors if production are insufficient to satisfy our needs and wants. All 3 problems are more clearly explained using a ppf/ppc 1) What to produce This problem is what should theeconomyproduce in order to satisfy consumer wants (as seen by demand curves) as best as possible using the limited resources available.If a country produces goods in a way that maximisesconsumer satisfactionthen the economy is allocatively efficient. 2) How to produce This problem is how to combine production inputs to produce the goods decided in problem 1 as most efficiently as possible. Aneconomyachieves prod uctive efficiency if it produces goods using the least resources possible. A productively effiecient economy is represented by an economy that is able to produce a combination of goods on the actual curve of the PPF. 3) For whom to produce Should the economy produce goods targetted towards those who have high incomes or those who have low incomes.What sort of demographic group should the goods in the economy that are produced be targetted towards? If the economy is addresses this problem then it has reached preto efficiency or pareto optimality. If all three problems are addressed at any one time then the economy has achieved still efficiency. If the economy achieves static efficiency over a period of time then it is dynamically efficient. All these problems are focused around the problem of unlimited wants and limited resources. Where resources are the fators of production (such as labor, capital, technology, land.. ) which are used to produce the products that satisy the wants. c onomic system Anorganizedway in which a state ornationallocatesitsresourcesandapportionsgoods and servicesin the nationalcommunity. Types of Economic Systems You cant always get what you want. Thats what the Rolling Stones sang, anyway (check it out great song even if its a bit in advance your time). And while Mick Jagger probably didnt have Econ 101 in mind, he managed to sum up utterly the core concept underlying all economics. Scarcityis the fundamental contest confronting all individuals and nations. We all mettle limitations so we all have to make choices.We cant always get what we want. How we deal with these limitationsthat is, how we prioritize and allocate our limited income, time, and resourcesis the basic economic challenge that has confronted individuals and nations throughout history. But not every nation has addressed this challenge in the same way. Societies have developed different broad economic approaches to manage their resources. Economists generally make d o four basic types of economic systemstraditional, take, market, and abstrusebut they dont completely agree on the question of which system best addresses the challenge of scarcity.Atraditional economic systemisheres a shockershaped by tradition. The work that people do, the goods and services they provide, how they use and exchange resources all tend to follow long-established patterns. These economic systems are not very dynamicthings dont change very much. Standards of living are static individuals dont enjoy much financial or occupational mobility. But economic behaviors and relationships are predictable. You know what you are supposed to do, who you trade with, and what to expect from others. In many traditional economies, community interests take precedence over the individual.Individuals may be expected to combine their efforts and share equally in the proceeds of their labor. In other traditional economies, some sort of private property is respected, but it is restrained b y a strong set of obligations that individuals owe to their community. Today you can find traditional economic systems at work among Australian aborigines and some isolated tribes in the Amazon. In the past, they could be found everywherein the feudal agrarian villages of medieval Europe, for example. In acommand economic systemorplanned economy, the government controls the economy.The state decides how to use and distribute resources. The government regulates prices and wages it may even determine what sorts of work individuals do. Socialismis a type of command economic system. Historically, the government has assumed varying degrees of control over the economy in socialist countries. In some, only major industries have been subjected to government management in others, the government has exercised far more extensive control over the economy. The classic (failed) example of a command economy was the communist Soviet Union. The collapse of the communist bloc in the late 1980s led to the emise of many command economies around the world Cuba continues to hold on to its planned economy even today. Inmarket economies, economic decisions are made by individuals. The unfettered interaction of individuals and companies in the marketplace determines how resources are allocated and goods are distributed. Individuals choose how to invest their personal resourceswhat training to pursue, what jobs to take, what goods or services to produce. And individuals decide what to consume. Within apure market economythe government is entirely absent from economic affairs.The United States in the late nineteenth century, at the h octet of the lassez-faire era, was about as close as weve seen to a pure market economy in modern practice. Amixed economic systemcombines elements of the market and command economy. Many economic decisions are made in the market by individuals. But the government also plays a role in the allocation and distribution of resources. The United States today, li ke most advanced nations, is a mixed economy. The eternal question for mixed economies is just what the right mix between the public and private sectors of the economy should be. Why It Matters TodayHalf of the twentieth century went down as a global battle between defenders of take over markets (democratic capitalist nations, led by the United States) and believers in command economies (the communist bloc, led by the Soviet Union). The US and USSR never went to war against each other directly, but dozens of smaller (yet still tragic and significant) wars unfolded around the world as bitter fights over economic systems turned bloody. Korea, Vietnam, Nicaragua, Afghanistan, Angola millions of people died in the various hot theaters of a Cold War fought to decide whether markets or states should control economic affairs.The great irony was that the Cold War finally ended not on a battlefield, but because the Soviet economy finally self-destructed by the late 1980s. For most of the wo rld, the Soviet collapse proved that command economies were simply humble to the market-dominated mixed economies of the capitalist world. Of course, China still ruled politically by an authoritarian Communist Party, even though its economy is now more mixed if not exactly free is now the biggest creditor nation to the United States. What are six major economic goals of a market economy? Freedom, efficiency, comparability, stability, security, growth.The 6 Economic Goals Objectives Summarize the basic economic goals societies share 6 Economic Goals Economic Efficiency Making the most of resources Societies must be efficient Economic Freedom Freedom from govt intervention in the production & distribution of G & S Economic Security and Predictability We want to know that G & S will be available (Paychecks too) Safety Net- govt programs that protect ppl experiencing unfavorable economic conditions 6 Economic Goals Cont. Economic Equity bazar distribution of wealth Eco nomic Growth and Innovation Innovation leads to growth, and economic growth leads to a high standard living Standard of Living- level of economic prosperity Other Goals Environmental Protection, Consumer Safety millennium Development Goals MDG redirects here. For other uses, seeMDG (disambiguation). The Millennium Development Goals are aUNinitiative. TheMillennium Development Goals(MDGs) are eightinternational developmentgoalsthat were officially established following theMillennium Summitof theUnited Nationsin 2000, following the bankers acceptance of theUnited Nations Millennium Declaration.All 193 United Nationsmember statesand at least 23international organizationshave agree to achieve these goals by the year 2015. The goals are Eradicatingextreme poverty and hunger, Achievinguniversal primary education, Promotinggender equalityandempoweringwomen, Reducingchild mortalityrates, Improvingmaternal health, CombatingHIV/AIDS,malaria, and other diseases, Ensuring environmentalsu stainability, and Developing a global partnership for development. 1Each of the goals has specific stated targets and dates for achieving those targets. To accelerate get on with, theG8Finance Ministers agreed in June 2005 to provide complete funds to theWorld Bank, theInternational Monetary Fund(IMF), and theAfrican Development Bank(AfDB) to cancel an special $40 to $55billion in debt owed by members of theHeavily Indebted Poor Countries(HIPC) to allow impoverished countries to rechannel the resources save from the forgiven debt to social programs for improving health and education and for alleviating poverty.Debate has surrounded adoption of the MDGs, focusing on lack of analysis and justification behind the chosen objectives, the difficulty or lack of measurements for some of the goals, and uneven progress towards stretchability the goals, among other criticisms. Although developed countries aid for achieving the MDGs has been rising over recent years, more than half the aid is towards debt relievo owed by poor countries, with much of the remaining aid money going towards natural disaster backup man and military aid which do not further development.Progress towards reaching the goals has been uneven. Some countries have achieved many of the goals, while others are not on track to realize any. A UN conference in September 2010 reviewed progress to date and concluded with the adoption of a global action plan to achieve the eight anti-poverty goals by their 2015 target date.There were also new commitments on womens and childrens health, and new initiatives in the worldwide battle against poverty, hunger, and disease. Government organizations take care in achieving those goals, among them are the United Nations Millennium Campaign, the Millennium Promise Alliance, Inc. , the Global Poverty Project, theMicah Challenge, The Youth in Action EU Programme, Cartoons in Action video project, and the 8 Visions of Hope global art project.