Easy on Economics

We often hear the terms ‘GDP’, ‘National Income’ in our day to day lives; in newspapers when the World Bank or a National Bank predicts a nation’s GDP and its growth rate for the next quarter or year; when Economists, policy makers and politicians debate how to increase the nations GDP and which policies would increase the national income of a nation.  The GDP, National Income are also used as an indicator to measure the standard of living of people in a country, to identify whether a nation is developed or developing, to compare the progress between different countries or regions . So, what is this GDP and why is it such an important part of Macroeconomic study? For centuries, policymakers, kings, politicians, economists and researchers have tried to find how to raise the income of a nation over a period of time.  In every nation, production of goods and services takes place. A variety of goods and services can be produced ranging from production of food grains to cloth to metals etc.

What do we Study in Economics? Economics studies how people make decisions or choices in order to meet their needs with their limited resources. Now who do we define as people in Economics? “People” in Economics covers a broad spectrum of human beings which we define as  Consumers, Producers, Sellers, Labourers, Savers, Investors, Firms etc. In Economics, we basically study the behaviour of these Consumers, Producers, Sellers, Labourers, Savers, Investors, Firms etc. Definition of Consumer:   A consumer is any individual or group of individuals who buy or purchase the goods and services for their personal use or direct use.    Personal use means the goods and services are not sold further for profit. Goods and services are consumed because it gives consumers utility. In Economics we study “ consumer behaviour ” in the wake of them buying goods and services. The study of consumer behaviour analyses how consumers decide which goods and services to buy with their limited income, how much

Microeconomics and Macroeconomics E conomics studies how rational people make economic decisions. The decisions can made be individuals, a firm, an industry, or even a government. Based on who is making the decision, Economics can be studied at two levels,  Microeconomics and Macroeconomics. What is Microeconomics? In Microeconomics, the decisions of an individual economic unit or group of individuals are studied, such as the behaviour of an individual consumer, farmer, producer or firm.  In Microeconomics, we also study how these individual units interact among themselves in a specific market. Microeconomics can be understood as getting a microscopic view of the economy. What do we study in Microeconomics? :  In Microeconomics we study a variety topics such as Determination of demand and supply of a particular good (let’s say ice-cream) Determination of price of a good Effect of price change on consumers and sellers Consumer behaviour and equilibrium Producer behaviour and equilibriu

Why Study Economics? Physics, History, Mathematics, Biology etc, all of us must have come across these names. These names which are known as subjects in school and college all have a purpose or reason to be studied. The basic purpose of any subject is to understand and know more about the world (or universe) which surrounds us, that comprises of natural phenomena, materials, people, plants etc., and make this knowledge useful for ourselves and the society . Depending upon what we want to know, these subjects can be categorised into Science, Commerce, Humanities, Social Science. Science looks into the behaviour of the physical and natural world in a systematic way, for example, Physics is a science dealing with the nature and properties of energy and matter, Biology deals with the study of living organisms. Humanities and Social Sciences look into the study of Human Behaviour, for example Sociology studies social behaviour and social change, Psychology is a scientific study of human min