Economic

Economics Defined and Its Various Categories
Economics is a particular branch of social science that concentrates on the efficient use of resources by individuals, businesses, governments, and even societies as a whole. Its focus is on the production or creation, distribution or exchange, and relationship with consumption of goods and services by different agents in the economy so as to address the issues of scarcity as well as effective utilization and management of resources. It is possible to differentiate two major segments within the areas of economics a micromarketing and a micromarketing. While the two approach the subject of economy from different angles and consider different aspects of economic activity and economic decision making.

Microeconomics

Microeconomics concerns itself with basic economic units in an economy like households and firms. Its main concern is also how such units of analysis optimize given resources through the decision-making processes of allocation, production and consumption. Important points of study in microeconomics are:

1. Supply and Demand
   The economic concept of supply and demand explains a fundamental market forces responsible in the determination of market pricing. Demand is the different quantities of goods and services that consumers will purchase at various prices whereas; supply is the different quantities of goods and services that the producers will sell at different prices.
2. Elasticity
   Elasticity refers to the extent to which the quantity demanded or the quantity supplied changes due to change in the price. This helps the firms and the governments to predict the likely behavior of the consumers and strategize accordingly.
3. Market Structures
   In Microeconomics, various kinds of market structures are studied such as perfect competition, monopolistic competition, oligopoly, monopoly, and each structure has its own features which determines the prices and production policies.

Macroeconomics

Macroeconomics is concerned with the overall economy and examines aggregate indicators as well as the whole economic climate. It deals largely with country- and worldwide economies and various processes associated with them including:

1. Gross Domestic Product (GDP)
   The gross domestic product, or GDP, is one of the most commonly used concepts in economics. It estimates the monetary value of all of the goods and services that were produced in a given country within a given time frame. It is one of the most important measures of the economy’s health and growth.
2. Inflation and Deflation
   In the economy, inflation is when the overall level of prices is increasing. A consumer’s ability to spend effectively falls with inflation. While deflation is lowering overall prices which may lead to people patronizing the same products or services less frequently so that month’s earnings do not contribute to the next month.
3. Unemployment
   Macroeconomics addresses such problem as unemployment in employment as cyclical, structural or frictional and this helps in understanding labor market dynamics and shaping growth promoting employment policies.
4. Fiscal and Monetary Policy
   To be able to maintain stability in an economy, boost growth, and control inflation, the governments and the central banks employ fiscal policies (by the government’s expenditure and taxes) and monetary policies (controlling money supply and interest rates).

Economic System Types

Available economic systems, in fact, contemplate various models of a tweak to one’s advantage explained in the context of one’s resources, respective of each economy. Ready systems exist, which can be put into several major categories:

1. Traditional Economy
   With traditional economies, customs and traditions determine the practices upheld economically. They prey more on either subsistence agriculture and hunting and gathering as with low technological capabilities.
2. Command Economy
   A command economy is one where the state controls almost every aspect of economic life. It determines the variety of goods and services produced within the economy, how they are allocated, and at what price. North Korea and the former Soviet Union are some of the examples.
3. Market Economy
   In a market economy, the interaction of supply and demand determines what goods and services are produced and their prices. Individuals and businesses are free to make economic decisions with minimum restrictions from the government. A good example of this is the United States.

Final thoughts

The economics discipline is important in understanding how people and resources are managed. A brief study of both micro and macroeconomic principles, and other economic systems across the world is useful in understanding how economies work. Such knowledge not only gives guidance to individual choices and entrepreneurship, but it also enables the designers of government policy and global economic order which affects all of us on daily basis. This study is also invaluable with the prevailing circumstances of globalization and rapid changes of the world.