Contribution of Economics to Today’s World
The word ‘economics’ came from the Greek word ‘oikonomia,’ which means ‘the household management.’ Actually, it refers to the financial management of household chores.
As for definition, we can say that economics is a kind of social science which balances between the unlimited want of human being and the alternative use of limited assets.
Does economics and economics tuition contribute to our day-to-day life? Let us discuss the facts. Indeed, economics is not merely a branch of study with the calculations of some figures. Instead, it has a significant impact on our everyday life. You can make better decisions with your knowledge of economics. Economics is the core, and management, marketing, funding, etc., are the branches.
Now let’s see some uses of economics in our real life.
We always face a common problem of chording the correct work in a short time. For example –suppose you get some free time. You have three options. You can study, or do a part-time job, or pass takes rest. If you look, it will enrich your knowledge, and if you work, it will give you money, and taking a rest will regain your energy. In this case, opportunity cost helps you to make a better decision.
Economics shows us that individuals are rational. It means that people often spent money on the things they consider satisfactory. In this case, behavioural economics shows us that we usually choose less essential items. Behavioural economics suggests us to become aware of factors that help to make the right choices.
Surviving during inflation
If we face inflation, then knowledge of economics helps us to overcome it. As an example – if the interest rate is higher than the inflation rate, we can secure a better economic life as a saver than borrower.
Investing: Economics teaches us about investing in stock markets and local markets. We can learn to face the situation through ‘irrational exuberance. ‘ It refers to the increased confidence of the people in a misplaced need. Indeed, this is a cause for the financial crisis.
In deciding what we should produce and consume, we often ignore the fact ‘externalities.’
It is a benefit or cost by a producer which a third party receives. It may be positive or negative. For example –when a farmer grows fruits, the external benefit is the bees that live nearby can collect nectar from the flowers. It is a positive externality in production. Here, we find the advantage in both ways. Bees save the cost to provide honey and help to fertilize the trees.
On the other hand, there are some negative externalities also. If we cut trees from a forest to make furniture, it creates negative externalities. It increases the amount of carbon dioxide in nature which is harmful to the world.
Choosing better work
A significant problem that we face often is choosing the right job. A well-paid job is not always a better one. Instead, a job with reasonable responsibilities that makes one part of progress is more satisfactory. Economics helps to make the right choice. It shows through some experiments that only healthy payment or bonuses is not the motivation for work.
Effect of higher interest rate: If the interest rate increases, then the rates of loans and credit cards also increase. It becomes a significant problem for people. Besides that, a higher interest rate increases the chance of unemployment.
In conclusion, we can say that knowledge of economics plays a vital role in our daily life. It is not merely the collection of some ideas, terms, or theories; instead, it helps us make better choices in most life cases. Although economics is sound, it is not an obvious fact for making decisions.