Question

1. From your own experience, in what way has the economy impacted you in the last year? Give some examples. Do you think the economy has impacted you in a positive or negative way? Why? Let me know what you think.

2. If economics is the study of how we choose to use resources, what are some of the choices that you have had to make in the last week or month that connect you to the economy? Give some examples. Were you aware that you were having to make these choices, or did they happen without much thought? Explain what you are thinking.

3. Reading an Economic textbook can be a challenge for some. How confident are you that when reading graphs and charts you will understand the relationships being presented and why?

Answer 1

1. The most beautiful aspect of economics is that you can always feel it around you. My economy always has a propound impact on the decisions I take. From whether to invest in the stock market or to understand what kind of jobs are in demand to the most basic life decisions of substituting tea for coffee because the price of tea has increased, the economy shapes our decision making process. In the last one year the economy has had a negative impact on me. The stock market has been going down systematically which indicates a bearish phase in the market, because of which i decided to sit back and invest in mutual funds that have both a lower amount of risk and return. Because of a rise in global crude oil prices, which constitute a huge amount of my countries imports, not only to local currency value has fallen but the prices of goods that are connected to oil have increased leading to a rise in inflation because of which i had to adjust my consumption patterns accordingly.

2. Economics is a study of allocation of resources. The resources are finite and the uses they can be put used to are infinite, so the question of maximizing the utility with the given constraint arises. The salary that i earn from doing my job is really limited. but the amount of alternative avenues i can use the money for are infinite, i can either buy a new vehicle or I can invest it into some interest yielding asset. I faced a similar choice and i decided to go with the former decision of buying the car because I felt it would give me more happiness or in terms of economics, more utility. My decision to buy the car helped create more revenues for the car manufacturer who in turn is able to use the profits to invest into other avenues, this creates a virtuous cycle and keeps us all connected to the economy. While taking this decision i was totally aware of its consequences and hence aware of the choices i made.

3. I am really confident of understanding the graphs because i feel economics is a study of common sense, all the graphs merely try to state the obvious which anybody who has a good grasp on common sense can understand for example the graph that shows the relationship between prices and demand, its easy to understand that once the price of a commodity rises its demand will fall (under normal circumstances) or if the interest rate on savings deposits rises then the people would be willing to deposit more into such accounts.