Question

Economic understanding.

Write a few paragraphs about your economic understanding. You can use examples . Summarize the example and explain why you find it particularly interesting or important. Add any relevant comments you have. It is a chance for you to express your economic opinions.

Answer 1

ECONOMY-

any economy is a place of executing business dealings which is also the fundamental and root cause of functioning of any other field whether that is concern with social development,research and development of innovative ideas.development of infrastructure etc.

ECONOMIC STUDY-

the value of economic study and the importance of this study is given below-

• economy study tells us that how to utilized the scarce resources and maximize the satisfaction within the given level of income.
• economic study tells us that how one sector and country mutually depends upon another/ other country/countries.the specialization leads to overall development for both the countries.it shows the mutual benefit of both the countries.
• economic study tells us how the government and central bank combat various adverse situation in the economy like recession,depression excessive inflation etc

the reason why i find this study is that it tells us how the global market works and how dynamic it is in nature.it helps to predict us the possible policy according to the economic situation.

EXAMPLE-

this study enlighten us with the fiscal and monetary tool of government and central bank's respectively.government may increase the tax rate and decrease the public spending to control the inflation and contrary steps could be taken to combat the recession whereas central bank would increase the reserve requirement and increase lending rates to control inflation and and contrary steps could be taken to combat the recession.

• economic efficiency can be achieved with the help of foreign trade.

EXAMPLE-

Suppose a country is efficient is producing clothes but lacks the production of wheat whereas the another country is effectively produce wheat but lack the production of clothes then with the principle of absolute advantage first country can focus on producing clothes and transfer the surplus production to the second country as export and the second country can focus on producing wealth and can export the surplus production to first country in consideration of import.

• terms like comparative advantage,opportunity costs,implicit cost,explicit cost and other terms can be easily understood and applied after the proper study of economic study.