Today, we’re going to discuss the nature of economics, what does it mean, How do economies work?? etc, etc.
All right, so let’s get started.
Shall we??
Now, as we all know economics is the study of how people use resources to produce goods and services that satisfy human needs and wants. It also includes the analysis of money, banking, and financial markets.
But what does Economics have to say about our lives??
Any clue, anybody??
To understand what economics has to say about our lives, we need to first understand what an economy is in the first place.
An economy is a system where people exchange money for goods, services & other things they value more highly like Gold, etc.
This exchange happens through the production, distribution, and purchase of goods and services via a "TOOL" called money as explained earlier.
In short, the economy works like a machine in clockwork, where transactions occur between money, financial assets, and credit for goods and services in a marketplace.
These transactions happen over and over again and again like clockwork to make the economy grow.
Get it??
Spending drives the economy.
Furthermore, this spending happens in two ways:
1). Through money that is earned by being productive and trading either time for money like in a job or trading goods and services for money like a business owner does.
2). Through creating something known as "CREDIT" I.E. creating an "I owe you" out of thin air with a promise to pay in the future.
Awesome right??
Now that we know this, let’s recap what economics is all about.
Shall we??
Economics as we have spoken about somewhere at the beginning of this article is the scientific study of ownership, use, and exchange of scarce resources between producers and purchasers within a marketplace.
This phenomenon is often shortened to the science of scarcity like having to make choices between an X-Box or a PS-4 in a game store because of something called a "Budget" I.E. the limited amount of money you possess at any given period via either doing a job or a business.
Catch my drift??
Economics, my friends, is a social science that utilizes scientific methods to build theories that are capable of explaining the behavior of different individuals like making x no. of choices in any given situation which arises in the minds of these individuals when scarce resources are exchanged between them in the marketplace.
In terms of methodology, economists, like other social scientists, are not able to undertake controlled experiments in the way that chemists and biologists are capable of performing.
Hence, economists have to employ different types of methods for conducting research, analysis, brainstorming & due-diligence, etc, which are grounded primarily on observation and deduction from those observations along with the construction of abstract models to solve xyz problems they might encounter in the marketplace.
Moreover, as the social lores have evolved over the last 100 generations, they’ve grown to become decreasingly specialized.
This is true for the domain of economics as well which has over the centuries of its developments & innovations witnessed the development of many different strands of investigation within the domain including topics like micro and macroeconomics, pure, industrial, and financial economics, etc.
What seems to be linking them all is the attempt to understand how and why exchange takes place, and how these exchanges create benefits and costs for all the participants involved in any given marketplace.
Pretty intriguing, right??
All right, so that is about it for this post guys.
I hope you enjoyed it.
Please stay tuned and do come back for more in the next post on ICCBizNews.
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