Download file to see previous pages...
Here the word economy stands for the national, industrial and firm level economy. But in practical sense it explains our day-to-day individual activities as well. Such activities may run from the way we compete our daily grocery to our evening coffee at a coffee shop. The major distinguishing factor between an economist and a non-economist is that, they have different perspective to see an event that can be as ordinary as picking some flower from the nearby market. This difference in view comes from the analytical economic forecasting that the subject teaches us to become a more rational human being. This forecasting can be made a lot complex if we consider forecasting through statistical data analysis and that might be a whole lot harder to explain to a non-economist. Therefore the present article emphasizes on economic logics that helps us analyse a situation and determine the right time to take an action that might be related with economics. Analytical economic forecasting follows a chain of events that it tries to sew with one another to get to the optimum decision destination. It starts with considering the focused event and ancillary events that are present around that; furthermore it tries to grasp the future events that might follow through in short or long run. Before moving into details it should be kept in mind that economics is a social science and any event in society that is substantially important to influence the surrounding will have an impact on the economy. Let us now analyse what sort of impact a rise in crude oil price might have on the economy from an economist point of view. To a non economist rise in crude oil price will definitely knock his head considering the higher price that he might have to pay now for gasoline; the fuel his car run on. However the wrinkles on his forehead and the anger that lays dormant deep into his heart will be multi fold if he considers the spiral of events that will follow suit a rise in crude oil price. Crude oil is the prime form of energy in America so a price rise will result in rise in price of energy, domestic and industrial alike. Several industries nation wide (if we restrict our views beyond the national boundary) uses crude oil or its refined form diesel, petrol or gasoline as raw material; a rise in the price of the same will definitely raise the price of those related products. What would be the effect on household? A simple example can be, perishable and non-perishable goods reach our market through goods vehicle that run on crude oil related products. A rise in the price of crude oil will make logistic costlier. This will reflect in higher price for the related goods such as vegetables, meats, milks and etc. Eventually this cost will have to be borne by the consumers, as the producers are always in look out to shift this extra cost burden to the consumers. This is the initiation of inflation spiral where rise in price for a product results in rise in price for other products and eventually within the economy a price related anarchy breaks down that seldom get tamed unless intervened by the government or the market force that is demand and supply interact with optimum speed to settle at a new equilibrium (Crane). The government might set a ceiling on price, or use subsidy. Whether in a free market mechanism the higher price might result in lower demand and greater supply and eventual settlement of price at a manageable level. A non-economist almost always overlooks the inflation spiral that might initiate within the economy from a single and simple event. It is also true that analytical economic forecasting not always provides
...Download file to see next pagesRead More
For instance, Adam Smith’s theory of the invisible hand argues that when people engage in business and selling they are governed by the invisible hand of the market that helps regulate prices and ensures that businesses and people act in certain ways. Indeed, the nature of economics is like psychology in that it presents theories of human behavior.
As such, economic analysis relates to the study of economic systems in an industry to ascertain the effectiveness of the operations of a given industry with reference to its profitability1. With this, we are able to establish the optimum use of the limited resources to achieve a given economic objective.
Thus, short-run is the time period that quantity of an input or at least one of the many inputs is fixed while other inputs’ quantities can vary. Long-run on the other hand is that time period where inputs in entirety can be varied. Therefore, there is no specific time that can be taken as fixed or even marked on the dates of the calendar to distinguish short-run from the long-run.
If the quantity demanded of a certain product changes minimally or does not change at all, then that product is said to be a Price Inelastic Good. Consequently, if a product whose price increased and such a change brought forth an abrupt drop in quantity demanded of the same product, the good is said to be Price Elastic.
e that the people of a country would receive the best of every thing that could be education, housing, health services or the other various basic necessities.
Economics has been called and is known as a Social Science one that actually focuses on the subject matter that is
sought to apply a broader theoretical and conceptual tradition of economic thought by placing emphasis on neo-classical synthesis – a combination of neo-classical economics and Keynesian economics.
Conservative economics is based on Milton Friedman’s teachings and
s the above figure illustrates, if there is a supply shock in an economy (such as increase in the price of oil, labor or other costs that increase the cost of doing business), the short run AS curve shifts to the left. The real GDP decreases from Q to Q’ and the price level
These tools enable professional mainstream economists to address various economic issues facing the world. Mainstream economics is about modeling in a way that traditional or heterodox economics is not. It originated from the neoclassical synthesis of the neoclassical
4 Pages(1000 words)Essay
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Essay on topic Economics for FREE!