Overview

Economics is the study of how societies allocate scarce resources. This topic introduces basic principles such as trade-offs, opportunity cost, markets, and the role of government. It also explores economic systems, monetary and fiscal policy, and major theories that explain economic behavior.

Key Themes and Concepts

• Scarcity, Choice, and Cost: Economics is rooted in the need to make decisions under conditions of limited resources. Every choice involves opportunity cost.
• Markets and Trade:
  • Supply and demand determine prices.
  • International trade increases efficiency through comparative advantage.
• Economic Systems: Capitalism, socialism, and mixed economies differ in ownership and resource allocation.
• Monetary and Fiscal Policy:
  • Monetary policy (central banks): Controls money supply and interest rates.
  • Fiscal policy (government): Involves spending and taxation.
• Economic Measurement:
  • GDP: Measures economic output.
  • Inflation: Measures price level changes.
  • Unemployment: Measures labor market performance.
• Major Economic Theories:
  • Classical: Markets are self-regulating.
  • Keynesian: Government intervention is needed during recessions.
  • Monetarism: Focuses on control of the money supply.

Quick Tip

Understanding economic behavior means seeing the big picture and the marginal choices behind it. From personal finance to global policy, economics helps explain how we prioritize, exchange, and grow.