[This is part of the series: The Complete Guide To Economics 101.]
Everyone loves talking about the economy.
Unfortunately, most have no idea what they are talking about.
Most think economics is about money, finance, banks, and interest rates.
While all of that can fall under the broad umbrella of economics, the actual definition is much broader.
So, what is the study of economics about?
Economics is the study of how people allocate scarce resources.
Economics focuses on scarcity.
In the face of scarcity, economics asks questions like:
- How do we decide who gets what?
- And how much does everyone get?
- What allocation of resources is controlled by the government – and what are the costs and benefits of this?
- What is controlled by individuals and private businesses?
- And what incentives cause all of us to make what decisions in the face of this scarcity?