Introduction
Economics is the social science that studies how individuals, businesses, governments, and nations make choices on allocating scarce resources to satisfy their unlimited wants. In other words, it is the study of how people make decisions in a world where resources are limited.
Microeconomics
Microeconomics focuses on the behavior of individual firms and households in making decisions on resource allocation. For example, how a household decides to spend its income on various goods and services.
Macroeconomics
Macroeconomics looks at the overall economy and studies factors like inflation, unemployment, economic growth, and monetary and fiscal policies. It deals with aggregates like GDP, national income, and overall price levels.
Key Concepts
- Supply and demand
- Opportunity cost
- Elasticity
- Market structures
Case Study: The Great Depression
During the Great Depression in the 1930s, the US economy experienced a severe contraction, leading to high levels of unemployment and economic hardship. Economists studied the causes and effects of the depression to learn from the past and prevent future economic crises.
Statistics
According to the World Bank, the global GDP in 2020 was $84.54 trillion. Inflation rates vary from country to country, with Venezuela experiencing hyperinflation in recent years.
Conclusion
Economics is a complex field that helps us understand how societies allocate resources to meet their needs and wants. By studying economics, we can make informed decisions that benefit individuals, businesses, and nations.
