Importance Of Economics In Economics

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Without any background knowledge in economics, neither business I must say it was difficult to understand the principles of economics. However, after reading and attending lectures I was able to learn and understand a great deal of economics and how it relates to the economy. I will therefore seek to explain three important lessons that I have learnt from the course. Firstly, I will define economics and its relations to real life experiences. Secondly I will look at demand and supply and last but not least I will look at unemployment and how it affects the economy. Economics is the study of how people allocate their limited resources to satisfy their unlimited wants. Economics is a part of social science and it seeks to find explanations …show more content…
We sometimes choose between sleeping or coming to Economics class or whether to buy Kentucky fried chicken or subway, but at the end of the day we all are involved in making decisions that will leave us better off. Time in economics is also limited, there are only 24 hours in one day and every second is counted, we never have enough time to satisfy our every desire. In short economics is all about choices; how we spend our limited funds and how we spend our limited time is also crucial. Businesses, nations and individuals face alternatives, therefore choices will have to be made. As a result, economics study how these choices are made. Microeconomics focuses on decision that individuals, households and firms undertake, it pays attention to the smallest part of the economy. For example a student’s decision to study for exams or a firm’s decision to invest is all choices that are made within an economy. Macroeconomics on the other hand studies the behavior of the economy as a whole. It deals with economy wide phenomena such as the national unemployment rate, the rate of growth in the money supply and the national government money supply. …show more content…
Unemployment is a serious issue that affects every economy. There are four major types of unemployment, frictional, structural, cyclical and seasonal. The unemployment rate is measured by dividing the number of persons employed by the amount in the labor force. Persons who are unemployed are categories as job losers, job leavers, new entrant, reentrant and discouraged workers. The flow of persons leaving and entering the labor force will decide the stock of the employed plus the unemployed. The period of unemployment will affect the unemployment rate. If the length of unemployment increases, the amount of unemployed that was measured will increase even though the unemployment rate remains the

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