Economics Essays

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The study of economics focuses on the study of the production, consumption, and transfer of wealth. Because wealth is defined in a wide variety of ways, the study of economics can be construed narrowly or broadly, and is interrelated with the study of sociology, philosophy, history, psychology, and culture. Economics is viewed, by some, as the study of scarcity, but economic principles apply even when resources are not scarce. It is also considered the study of resources. Many people believe that economics is primarily about money or financial resources because economic study focuses on topics like banking, wealth, and finances. However, economics is not synonymous with finance. Finance refers to the management, creation or study of money, banking, credit, investments, assets and liabilities. It consists of financial systems and financial instruments and is divided into three sub-categories: public finance, corporate finance, and personal finance. Economics includes those areas, but is not limited to them. Furthermore, an education in economics is not only useful in economics-specific careers such as accountant, economist, financial risk analyst, investment analysis, and statistician, but also teaches skills that are transferable to other areas and industries. Macroeconomics examines the economy from the broader perspective. It looks at economic trends including: inflation, deflation, recession, depression, price levels, wage levels, employment, unemployment, gross domestic product, national income, and rate of growth. Macroeconomics is concerned with monetary policy, which, in the United States, is set by the Federal Reserve, often referred to as the Fed; international trade policies; tax policies; aggregate demand; and aggregate supply. Microeconomics examines the economy from a narrower perspective. It looks at how individuals, whether people or firms, interact in the market, and at specific buyer-seller transactions. However, in an increasingly global economy, with large firms dominating some areas of industry, it can become difficult to separate microeconomic and macroeconomic studies. Elasticity refers to the change in consumer demand. Demand for some products remains fairly stable, regardless of fluctuations in price. For example, the demand for water is fairly non-elastic. However, when there are substitute goods available, demand for a product may be very elastic. Microeconomics also examines income distribution, particularly income inequality. It also looks at how different types of ownership can alter the basic rules of supply and demand. For example, monopolies and oligopolies, where either a single or a small number of companies control all of a product, can artificially inflate prices. Another critical component of economic studies is an understanding of supply and demand. Demand refers to how willing people are to purchase a particular product. In other words, what is the desire or need for that product. Supply refers to how much of the product is available. Supply does not refer only to the total amount of the good or resource that is available, but to the amount of the resource or good that is accessible. Generally, as demand rises, prices also rise, and sellers are likely to make a greater supply available at that cost. However, as supply rises, then the price that can be charged for the item tends to drop, even if there is no decrease in overall demand, because consumers can search for a less expensive option. Market equilibrium refers to the market price at which buyers will buy the same number of goods that sellers are willing to sell at a particular market price.