UNDERSTANDING
ECONOMICS
WHAT IS ECONOMICS
Economics is the study of scarcity and its implications for
the use of resources, production of goods and services,
growth of production and welfare over time, and a great
variety of other complex issues of vital concern to society.
WHAT IS ECONOMICS
The study of economics is primarily concerned with
analyzing the choices that individuals, businesses,
governments, and nations make to allocate limited
resources. Economics has ramifications on a wide range of
other fields, including politics, psychology, business, and
law.
WHAT IS ECONOMICS
The field of economics is connected with
and has ramifications on many others,
such as politics, government, law, and
business.
WHAT IS ECONOMICS
The two branches of economics are
microeconomics and macroeconomics.
WHAT IS ECONOMICS
Economics focuses on efficiency in
production and exchange.
WHAT IS ECONOMICS
Gross Domestic Product (GDP) and the
Consumer Price Index (CPI) are two of
the most widely used economic
indicators.
GROSS DOMESTIC
PRODUCT (GDP)
Gross domestic product is the
monetary value of all finished goods
and services made within a country
during a specific period.
CONSUMER PRICE
INDEX (CPI)
Indicator of the change in the average
prices of a fixed basket of goods and
services commonly purchased by
households relative to a base year
Do you know that
The study of microeconomics
focuses on the choices of
individuals and businesses, and
macroeconomics concentrates
on the behavior of the economy
on an aggregate level.
Do you know that
One of the earliest
recorded economists
was the 8th-century B.C.
Greek farmer and poet
Hesiod
Do you know that
The publication of Adam
Smith's 1776 book An Inquiry
Into the Nature and Causes of
the Wealth of Nations sparked
the beginning of the current
Western contemporary
economic theories.
MICROECONOMICS
Microeconomics studies how
individual consumers and firms
make decisions to allocate
resources.
MaCROECONOMICS
Macroeconomics is the branch of
economics that studies the behavior
and performance of an economy as a
whole. Its primary focus is recurrent
economic cycles and broad economic
growth and development.
MaCROECONOMICS
It focuses on foreign trade, government
fiscal and monetary policy, unemployment
rates, the level of inflation, interest rates,
the growth of total production output, and
business cycles that result in expansions,
booms, recessions, and depressions.
Economic indicators detail a country's
economic performance. Published
periodically by governmental agencies or
private organizations, economic indicators
often have a considerable effect on stocks,
employment, and international markets.
Economic systems
Primitivism
In primitive agrarian societies, individuals
produced necessities from building
dwellings, growing crops, and hunting game
at the household or tribal level.
Economic systems
Capitalism
Defined as a system of production where
business owners organize resources including
tools, workers, and raw materials to produce
goods for market consumption and earn profits.
Supply and demand set prices in markets in a
way that can serve the best interests of society.
Economic systems
Socialism
Form of a cooperative production economy.
Economic socialism is a system of production in
which there is limited or hybrid private ownership
of the means of production. Prices, profits, and
losses are not the determining factors used to
establish who engages in the production, what to
produce and how to produce it.
Economic systems
Communism
Communism holds that all economic activity is
centralized through the coordination of state-
sponsored central planners with common
ownership of production and distribution.
COMMAND ECONOMY
A command economy is an economy in which
production, investment, prices, and incomes are
determined centrally by a government. A
communist society has a command economy.
LET’S DISCUSS!
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