When you google the question "What is economics?" this is what you get: Economics is a social science concerned with the production, distribution, and consumption of goods and services. It studies how individuals, businesses, governments, and nations make choices about how to allocate resources.
I want to tell you 10 important facts regarding economics that you should know.
First of all you probably know that we all have specific needs which we have to fulfill in order to life a live worth living. There are different groups of all the human needs. We need some of them to even survive and some of them are just an encore.
The next important fact is about resources. We only have one planet so we have to take care of it and life sustainably. Resources are used to produce goods therefore they play an important role in economics.
One of the most meaningful things in economics is the circular flow model of a market economy. It consists of a flow of goods and services and a flow of money. It has to be like that in order to have a well-functioning economy. With this circular flow model the existence of the economy is always guaranteed because the cycle goes on.
A further point is the devision of labor. There are three different types. The division within an enterprise, the regional division of labor and the international devision which is also known as globalization.
Furthermore, there is a market and a market model which consists supply and demand. The price of a product depents on supply and demand. The higher the price, the lower the demand and the higher the supply.
Money is probably one of the most important things within an economy. There are different functions of money. It is used as a means of exchange, it preserves value, you can calculate with it and you can ask your bank for a loan so it plays an important role at financing. In addition, money can lose its value. That is called inflation. Deflation is the term when money gains value. Both are bad and they should not overstep a maximum of 2%.
Then, there are different economic systems such as the "Planned Economy", the "Eco-Social Market Economy" and the "Free Market Economy".
Economic activities can be measured with the GDP, the gross domestic product. That is the total yearly income in an economy.
Now I would like to take a closer look at economics in Austria. Since we have an Eco-Social Market Economy we have some realizations of it. We have so-called "Social Partnerships" which support employees and employers. Some of them are the chamber of commerce, the chamber of agriculture or the trade unions.
Last but not least there are goals of economic policy. Economic policy is the sum of all planned measures of the state and other institutions to stimulate the economy through monetary policy, fisical policy, labor market and social policy, health and education policy and environmental policy.
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