What is Economics?

Economics is the social science that studies the production, distribution and consumption of goods and services.

Economics can be divided into 2 major categories:
1. Microeconomics is the branch of economics dealing with particular aspects of a national economy, such as individual firms, households and consumers. This branch analyzes the market behavior of individual consumers in order to understand the decision-making process. This area also concerns the interaction made between the individual buyers and sellers and the factors that influence the choices made.
2. Macroeconomics is a branch of economics that studies the behanior of the aggregate economy, It examines economy-wide phenomena like changes in unemployment, rate of growth, inflation, national income and price levels.

Economic Key Terms

• Gross Domestic Product (GDP)- The monetary value of all goods and services produced by an economy over a specified period. It includes consumption, government purchases, investments, and exports minus imports.
• Law of Demand- A microeconomic law that states that, a;; pther factors being equal, as the price of a good or service increases, consumer demand for the good or service decreases, and vice versa.
• Supply and Demand- The classical economic theory that relation between thesetwo factors determines the price of the good. This relationship is thought to be the driving force in a free market. As demand for an item increase the prices increase also.
• Commodity- Any product manufactured of grown
• Monopolies- Exclusive control of a commodity or service in a particular market, or control that makes possible the manipulation of prices.
• Advertising- To announce or praise a prduct or service in some public communication.
• Consumption- The act of consuming, as by use, decay or destruction
• Deflation- A general decline in prices, often caused by a reduction in supply of money or credit, but also caused by a decrease in government, personal or investment spending.
• Elasticity and Inelasticity- A shift in either demand or supply of a good or service depending on its price. Demand is said to be elastic when it responds quickly to changes in prices, and inelastic when it responds sluggishy.
• Employment- The state of being employed or employing someone. Also the act of giving someone a job.
• Exchange rate- The ratio at which a unit of the currency of one country can be exchangd for that of another conutry. (also called the Rate of Exchange0
• Exports- To send or transport a commodity abroad especially for trade or sale.
• Imports- To bring or carry in from an outside source, especially tp bring in goods or materials from foreign coutries for trade or sale.
• Inlflation- A persistemt, substantial rise in the general level of prices related to an increase in volume of money resulting in the loss of value of currency.
• Productivity- Having the power of producing; readily and abundantly.
• Tax revenue- Government income due to taxation.
• Unemployment- Not having a job. The rate of unemployment is an indicator of the health of an economy.