1. Economics and Economy

My task is to tell you about the basic concepts related to economics and economic activities.

At the beginning I want to say that economics is the social science studying the production, distribution and consumption of goods and services. Every person has needs and wants.

The work people do is called economic activity. All economic activities taken together make up the economic system of a town, a city, a country or a world. Such an economic system is the sum-total of what people do and what they want.

An economic system is a set of rules used to allocate a society’s resources to satisfy its citizens’ needs.

It should be noted that there are two sides to the study of economics: microeconomics and macroeconomics. Microeconomics is concerned with individual products and decisions made by individual firms and consumers. Macroeconomics is concerned with the functioning of the overall economy.

In modern economies, there four main sectors of economic activity:

1.Primary sector of the economy. Involves the extraction and production of raw materials

2.Secondary sector of the economy. Involves the transportation of raw or intermediate materials

3.Tertiary sector of the economy. Involves the provision of services to consumers and businesses

4.Quaternary sector of the economy. Involves the research and development needed to produce products from natural resources.

Yet another economic force that can determine price levels is supply and demand.

Supply is the producer’s ability and willingness to provide goods and services on a particular date at a given price.

Demand is the amount of goods and services that consumers are willing to purchase on a given date at a given price.

Finally, it should be noted that the science of economics is based upon the facts of our everyday lives. Economists try to describe the facts of economy in which we live, and to explain how it works.

2. Microeconomics and Macroeconomics

My task is to tell you about the basic concepts related to microeconomics and macroeconomic.

At the beginning I want to say that economics is the social science studying the production, distribution and consumption of goods and services.

Economics as a science consists of two disciplines such as macroeconomics and microeconomics.

I shall describe each of them. Microeconomics deals with analysis of specific economic factors and detail study of their behavior. It studies individual producers, consumers or markets. Microeconomics also studies how government activities such as regulations and taxes affect individual markets. Therefore, the focus of microeconomics study is on price or production of some product, number of employees, profit or income and expenses of enterprises.

Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole, rather than individual markets. This includes national, regional, and global economies. Macroeconomists develop models that explain the relationship between such factors as national income, output, unemployment, inflation, savings, investment, international trade and international finance.

Dear my classmate, I want to tell you that the different between microeconomics and macroeconomic consist in microeconomics takes a bottoms-up approach to analyzing the economy while macroeconomics takes a top-down approach. Thus, whereas microeconomics is the study of the individual pieces of the economic puzzle, macroeconomics puts all the pieces together to focus on the big picture.

Both micro- and macroeconomics provide fundamental tools for any finance professional and should be studied together in order to fully understand how companies and the overall economy of the country interact.