Ultimate Guide To Learning Economics
We live in a world full of opportunities and possibilities. Most of us understand the basics of politics, business, and diplomacy, but economics is a topic that causes confusion. However, economics is vital for business success, and global development. The social science uses mathematics to make conclusions about how a business or country makes choices. When used correctly, economics can increase stability and helps people become more organized and efficient.
The focus of economics is to look at how organizations produce and consume services or goods. There are many types of economics, depending on the scale of use. We’ll look more at this later, but first, let’s delve into the diverse and interesting history of economics.
The History of Economics
We can trace economical thinking all the way back to Ancient Greece, where Hesiod, a farmer, and poet stated that materials, time and labor should be allocated efficiently. We can think of economics as a practical approach to balancing our wants with what we can achieve.
Many people credit Adam Smith for developing the science of modern economics, and while he was a vital factor, it’s important to note the theories of others inspired Smith. French writers that hated mercantilism gave Smith the foundations to build his vision on. He used these philosophies to devise a way countries could measure their economic potential and work together instead of against each other.
Mercantilism was about each country trying to dominate trade, but Smith theorized that countries were self-regulating themselves with these practices. He also believed that governments should not have any part in businesses through taxes and tariffs. Smiths theory resulted in many opinions, and this has resulted in a variety of economic practices.
While there were many critics of the foundations of economics from Karl Marx and other public figures, the field has grown to incorporate countries, governments and business growth. After books such as The Elements of Economics, by Leon Walras mathematics began to play a pivotal role in the subject.
General Equilibrium Theory is a turning point between the idea of economics and implementing the theory. By using statistics and numbers, organizations can gain valuable insights into how they operate and make improvements based on the information. The act of assessing the whole economy and achieving a balance is used today throughout the world.
The Main Areas of Economic Study
While there are many types of economics, the two main variations are microeconomics and macroeconomics. Both use the same principles, but evaluate different areas of production and consumption.
When looking at the world of economics, it’s easy to become confused. Microeconomics looks at things on a smaller scale and focuses on individuals rather than the whole picture. For example, we can apply microeconomics to an individual person, a family unit, a business or an official organization.
The study of microeconomics evaluates how trades occur and the impact of supply and demand on prices. One major aspect of microeconomics is John Nash’s Game Theory.
Human action is the main part of microeconomics, and especially spending behavior. The insights gained from each person or organizations actions shed light larger economic outlooks. For example, if a family spends above their means, they’ll accumulate credit card debts. These small decisions turn into big problems when families around the world are in debt and cannot afford to pay it back. Demand overtakes supply because, without the money to develop products and services, companies can’t meet the demands of other people.
If microeconomics looks at the smaller picture, macroeconomics is the overall story. Macroeconomics is applied when analyzing the economic outlook for countries, continents and even the world. People study government policies, unemployment rates, and business cycles to gain valuable insights into the overall outlook.
Macroeconomics is difficult to understand because there are many factors to consider. This includes inflation, stability, and growth. When used alongside microeconomics, people can gain insights into how small decisions are impacting the economic outlook on a larger scale.
While economic study focuses on implementing mathematics and statistics to gain valuable insights, there are many theoretical approaches within different groups. Economic thought is a philosophical approach to economics rather than a logical one. There are two main schools of thought:
Monetarist and Keynesian Schools of Thought
Monetarists favor free markets and believe they play a vital part in stabilizing the global market. This theory places money as the most important factor in an economy and monetarists believe governments should control the supply of money and inflation rates.
Keynesians disagree with monetarists and place individual spending at the hub of every successful economy. If people don’t spend money, then the economy won’t balance, so they state that governments should spend more to save more. In a recession, we’re more likely to save money but Keynesians say that this causes more problems in the long-run as little economic growth can be achieved.
The Keynesian theory was popular during the 1950s, 1960s, and 1970s, but monetarism is the favored way for governments to balance the economy. However, many say that fluctuating inflation rates will cause long-term damage.
Both theories have their merits and when applied together, governments could achieve long-term stability that seems impossible.
Economics is a diverse and complex subject area, with many theories and practices. Not only can it help governments stabilize the economy, but it also helps people make important decisions. Every decision we make can impact the economy in a certain way, so understanding the fundamentals can help you ensure your own stability.
In uncertain times, looking at studies enables people to determine which career path is right for them and whether buying a house is a good idea. Economics plays one of the most vital roles in households, businesses and on a global scale.
About This Economics Guide
This guide offers the most insightful articles, educational videos, expert insights, specialist tips and best free tutorials about economics from around the internet. The learning guide is split into four levels: introduction, basics, advanced and expert. You can learn at your own pace. Each item shows an estimated reading or watching time, allowing you to easily plan when you want to read or watch each item. Below you’ll find a table of contents that enables you to easily find a specific topic you might be interested in.
What is Economics?
Many people hear the word “economics” and think it is all about money. Economics is not just about money. It is about weighing different choices or alternatives. Some of those important choices involve money, but most do not. Most of your daily, monthly, or life choices have nothing to do with money, yet they are still the subject of economics.
The Importance of Economics
Economics is important because it helps people understand how a variety of factors work with and against each other to control how resources such as labor and capital get used, and how inflation, supply, demand, interest rates and other factors determine how much you pay for goods and services.
What Does an Economist do?
Economists study how society distributes resources, such as land, labor, raw materials, and machinery, to produce goods and services. They conduct research, collect and analyze data, monitor economic trends, and develop forecasts on a wide variety of issues, including energy costs, inflation, interest rates, exchange rates, business cycles, taxes, and employment levels, among others.
The Four Types Of Economies
The way scarce resources get distributed within an economy determines the type of economic system. There are four different types of economies; traditional economy, market economy, command economy and mixed economy. Each type of economy has it’s own strengths and weaknesses.
Basic Elements of Supply and Demand
In this video, Jacob Clifford explains the law of demand, the substitution effect, the income effect, the law of diminishing marginal utility, and the shifters of demand. Make sure that you understand the difference between a change in quantity demanded and a change in demand.
What are the Major Divisions of Economics?
Economics is the social science that is concerned with employing society’s resources in such a way as to achieve the maximum level of satisfaction of societal needs and wants. Five major divisions in the discipline provide a conceptual framework for studying economic processes and institutions.
The Evolution of Economics
This paper suggests that contemporary economics is characterized by three key features. First, it is focused on “big questions” in political economy and is willing to look outside economics to search for these questions and their answers. Second, contemporary economics is empirically focused. “Grand theory” has taken a back seat to empirical explorations of institutions in particular. Third, modern economics has been dramatically influenced by “freakonomics”—the application of economic principles to unusual and unorthodox topics—and is increasingly directed at a popular lay audience.
What is Microeconomics?
Microeconomics has to do with supply and demand, and with the way they interact in various markets. Microeconomic analysis moves easily and painlessly from one topic to another and lies at the center of most of the recognized subfields of economics. Labor economics, for example, is built largely on the analysis of the supply and demand for labor of different types.
Theory of Production: Cost Theory
In the Cost Theory, there are two types of costs associated with production – Fixed Costs and Variable Costs. In the short-run, at least one factor of production is fixed, so firms face both fixed and variable costs. The shape of the cost curves in the short run reflect the law of diminishing returns.
What is Macroeconomics?
Macroeconomics is a ‘top-down’ approach and is in a way, a helicopter view of the economy as a whole. It aims at studying those aspects and phenomena which are important to the national economy and world economy at large. To mention a few of them are the country’s GDP (Gross Domestic Product) growth; inflation and inflation expectations; the government’s spending, receipts, and borrowings (fiscal policies); unemployment rates; monetary policy, etc.
What is Gross Domestic Product (GDP)?
Gross Domestic Product (GDP) is the broadest quantitative measure of a nation’s total economic activity. More specifically, GDP represents the monetary value of all goods and services produced within a nation’s geographic borders over a specified period of time.
Keynesian vs Classical models and policies
In macroeconomics, classical economics assumes the long run aggregate supply curve is inelastic; therefore any deviation from full employment will only be temporary. The Classical model stresses the importance of limiting government intervention and striving to keep markets free of potential barriers to their efficient operation. Keynesians argue that the economy can be below full capacity for a considerable time due to imperfect markets. Keynesians place a greater role for expansionary fiscal policy (government intervention) to overcome recession.
What is Managerial Economics?
Managerial Economics can be defined as amalgamation of economic theory with business practices so as to ease decision-making and future planning by management. Managerial Economics assists the managers of a firm in a rational solution of obstacles faced in the firm’s activities.
Economic Concepts Used in Managerial Economics
Managerial economics uses a wide variety of economic concepts, tools, and techniques in the decision-making process. These concepts can be placed in three broad categories:
(1) the theory of the firm, which describes how businesses make a variety of decisions;
(2) the theory of consumer behavior, which describes decision making by consumers; and
(3) the theory of market structure and pricing, which describes the structure and characteristics of different market forms under which business firms operate.
What is Political Economy?
Political economy is a social science that studies production, trade, and their relationship with the law and the government. It is the study of how economic theories affect different socio-economic systems such as socialism and communism, along with the creation and implementation of public policy.
Economics versus Politics: Pitfalls of Policy Advice
The fundamental approach to policy prescription in economics derives from he fundamental approach to policy prescription in economics derives from the recognition that the presence of market failures—like externalities, the recognition that the presence of market failures—like externalities, public goods, monopoly, and imperfect competition—creates room for public goods, monopoly, and imperfect competition—creates room for well-designed public interventions to improve social welfare.
The Economics Of Uncertainty
Sheila Dow discusses the concept of radical uncertainty and the failure of neoclassical economics to integrate it into its analysis. As to the implications for financial regulation that arise from the presence of radical uncertainty she argues for institutional overhaul, where the banks see themselves as a licensed partner of the central bank and where rules, values, and conventions would be subject to a cultural shift. Also, Sheila Dow advocates for a renewed focus on retail banking.
What is Economic Globalization?
Over the past two to three decades, under the framework of General Agreement on Tariffs and Trade (GATT) and World Trade Organization, economic globalization has been expanding at a much faster pace. Countries have rapidly been cutting down trade barriers and opening up their current accounts and capital accounts.
Pros and Cons of Globalization
The Milken Institute’s “Globalization of the World Economy” report of 2003 highlighted many of the benefits associated with globalization while outlining some of the associated risks that governments and investors should consider. The principles of this report still remain relevant.
The Ten Principles of Economics
When talking about a list of economic principles, this most commonly refers to Gregory Mankiw’s “Ten Principles of Economics.” The list is a set of principles about the way economics should work. The 10 principles are divided into three categories: decisions people make, the work of the economy as a whole and people interactions.
Does the government direct the economy, or does the economy direct itself? Until the 20th century the country abided by the laissez-faire policy, which required a free market with little intervention from government. With the Great Depression came Keynesian economics, or the opposite belief that the government should manage the economy.
Policies for Stabilisation and Growth
Economic stability enables other macro-economic objectives to be achieved, such as stable prices and stable and sustainable growth. It also creates the right environment for job creation and a balance of payments. This is largely because stability creates certainty and confidence and this encourages investment in technology and human capital.
Economic Effects of Migration
The economic effects of migration vary widely. Sending countries may experience both gains and losses in the short term but may stand to gain over the longer term. For receiving countries temporary worker programs help to address skills shortages but may decrease domestic wages and add to public welfare burden. The economic effects of migration for both sending and receiving countries may also vary depending on who is moving, specifically with respect to migrant workers’ skill levels.
What America Will Look Like in 2050
Americans are narrowly hopeful about the future of the United States over the next 30 years but more pessimistic when the focus turns to specific issues, including this country’s place in the world, the cost of health care and the strength of the U.S. economy. Overall, six-in-ten adults predict that the U.S. will be less important in the world in 2050.
A Healthy Economy Should be Designed to Thrive, Not Grow
What would a sustainable, universally beneficial economy look like? “Like a doughnut,” says Oxford economist Kate Raworth. In a stellar, eye-opening talk, she explains how we can move countries out of the hole — where people are falling short on life’s essentials — and create regenerative, distributive economies that work within the planet’s ecological limits.
Further Reading: Best Economics Books
The Economics Book: Big Ideas Simply Explained. This book is the essential reference for students and anyone else with an interest in how economies work. Easy-to-follow graphics, succinct quotations, and thoroughly accessible text throw light on the applications of economics, making them relatable through everyday examples and concerns.
Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics. With over a million copies sold, Economics in One Lesson is an essential guide to the basics of economic theory. A fundamental influence on modern libertarianism, Hazlitt defends capitalism and the free market from economic myths that persist to this day.
Basic Economics, Fifth Edition: A Common Sense Guide to the Economy. Bestselling economist Thomas Sowell explains the general principles underlying different economic systems: capitalist, socialist, feudal, and so on. In readable language, he shows how to critique economic policies in terms of the incentives they create, rather than the goals they proclaim.
Economics 101: From Consumer Behavior to Competitive Markets. This book cuts out the boring explanations, and instead provides a hands-on lesson that keeps you engaged as you explore how societies allocate their resources for maximum benefit. From quantitative easing to marginal utility, this primer is packed with hundreds of entertaining tidbits and concepts that you won’t be able to get anywhere else.
Further Learning: Best Economics Courses
Introduction to Economic Theories. This is the first online course that teaches economics from a pluralist perspective. Economic pluralism means that a plurality of theoretical and methodological viewpoints is regarded as valuable in itself and is simply the best way in which economics can make progress in understanding the world.
Microeconomics Principles. The main goal of this course is to show you the way economists think and how to use this analytical system to answer questions related not only to these and other important human issues but to anything you end up doing with your life after this class.
The Power of Macroeconomics: Economic Principles in the Real World. In this course, you will learn all of the major principles of macroeconomics normally taught in a quarter or semester course to college undergraduates or MBA students. You will also learn how to apply these principles to a wide variety of situations in both your personal and professional lives. In this way, the Power of Macroeconomics will help you prosper in an increasingly competitive and globalized environment.
Economics: Mastering Microeconomics 101. This course covers the most important foundation concepts in microeconomics necessary for application in more advanced models. Principles and theories discussed in this course can also be applied in real life decision making. All the important theories, models, graphs and laws are discussed using high-quality sound and animation.