Basic Economics

Finance and economics are two interrelated topics. Economics deals with the study of finance and the economy. Economics is a subject of social science. It deals with many things like the production of goods, distribution, and consumption of goods, and also the services. Basic economics helps to gain knowledge of how individuals and businesses, and governments of the country distribute and manage their resources. Economics deals with the study of labour and trade. Apart from this, basic economics also focuses on the rational behaviour of human beings, which focuses on the optimal level of benefits. This is what all basic economics is all about. Read further to know more about economics and its branches.

Branches of Economics

Economics is divided into branches. Simple economics has majorly two branches. These branches are made to simplify the study of the subject. These branches are basic microeconomics and macroeconomics. To give you a better understanding of both the branches below is a short description of both of them. 

Microeconomics: Basic microeconomics focuses on the economy and the economic behaviour of individuals, businesses, and firms. It keeps a check on how individuals and firms make their economic decisions. These decisions can be in the form of business plans and models, households, domestic investment, etc. The decision-making units or the people who make these decisions can be either an organization, government body, or the person himself. 

Basic microeconomics deals with how the person responds to a particular price and their demands at the particular price levels. It deals with the explanation of how different goods are priced and why they are priced so. It also focuses on explaining how individuals make their financial decisions and carry out the trade. The simple economics of microeconomics involves the understanding of the dynamics of supply and the costs involved in the manufacturing process. And how the products are priced involving all these factors is also explained by microeconomics. As labour and its division is the key aspect of simple economics, microeconomics also explains this and gives an idea of how companies and firms manage economic risks and uncertainties. 

• Macroeconomics: Macroeconomics is another branch of basic economics. It primarily deals with an overall understanding of the economy at both national and international levels. This study involves the collection of all the economic data and other variables which are necessary to model and study the economy as a whole. It can focus at different levels, like at a particular geographical location of a district, a country, or a continent, and sometimes even of the entire world. 

In this branch of basic economics, the major criteria of study include the recurrent cycles of the economy and the growth and development of the economy broadly. Topics like foreign trade, government’s policy of fiscal and monetary, unemployment index, the different levels of interest rates, the growth of overall manufacturing output, etc., are included in this branch. The above two branches of basic economics are interconnected with each other. The macroeconomics studies and results are just the analysis made from the studies of microeconomics. However, even after being interconnected, the two branches of basic economics are being used very differently. They have contrasting theories and models, which sometimes can give rise to conflicts. Economists take a keen interest in the integration of the principles of microeconomics with the theories of macroeconomics. 

Indicators of Economy

As you study basic economics in deep, you will learn about different indicators of the economy. These indicators of economy majorly focus on the performance of a country in any particular area or field. These indicators can be easily read and found in basic economics books. Some of these indicators are being explained below. They are the major economic indicators used and studied all over the world. These indicators are beneficial for the investors to forecast how the economic scenario will affect the market and help guide the economic decisions of the firms. 

Some Major Economic Indicators are as follows:

• GDP: GDP stands for Gross Domestic Product. It is used by many economists to calculate the economic performance of the country. GDP shows the complete market value of the finished manufactured product and services in one complete year that is produced in any country. But most of the traders and investors do not take into account this final report; instead, they keep their focus on the reports that were formulated and issued before some months.
• Retail sales: Another indicator of the economy that helps study basic economics is retail sales. It is made and reported in the middle of each month by the commerce department. The retail sales report is analyzed closely and helps measure the total receipts of goods and products that are sold in the stores. 

Conclusion

The economy of the country is the sole factor that decides the growth and development of the country. Calculation of the economy and maintaining the economy of the country contributes majorly to the development of the country. Having some knowledge of basic economics is necessary for every individual. It helps the person to deal and plan his finances and prepare for the uncertainties.