Introduction to Economics
Economics Definition: Economics is a study of the usage of resources to improve the livelihood of the people. It does not speaks only about money and price. It speaks about how
resources should be managed. It also explains how to balance the demand and supply for improving the livelihood of all the people.
Two branches in Economics:
Microeconomics (individual choices) which deals with entities and the interaction between those entities.
Macroeconomics (aggregate outcomes) deals with the entire economy as a whole.
The aim of studying economics is to understand the decision process behind allocating available resources to get the best possible results out of the resource available.
The economics and politics of a country are closely inter-linked to determine the well-being of its citizens.
Where Economy is used:
Economy is used everywhere, its used in every road side shop to big show room. Every price and resources available involved economics.
Daily we know that Gold prices varies. Do you know how?
The gold prices are determined by the demand(Needs) and supply(Availability). If there is a new that in Africa they found 1000 tons of Gold. Do know what will happen to price of Gold?
Of course the answer is the prices will reduce. Why?
There is huge increase in supply but you might think its a good news for the world. In no way finding Gold is important to world because it is not a must or necessary good.
As Warren buffet mentioned no one can justify the price of Gold as we could not see the purpose for Gold. Gold is priced based on greed for human.
Nowadays drinking water is priced but not before 20 years. Do anyone knows why?
Water is used as commodity like gold and Silver. By the end of Industrial revolution water as commodity found itself as increased demand.
Supply of water was not managed due to improper management and high usage of water for creation of machinaries.
As part of this blog, I will provide my views on policies of every RBI meetings Quarterly.