Question

what is your opinion of the economy?

Answer 1

Economics :

Definition of economy :

Economics is the study of given ends and scarce means.Lionel Robbins, biography, from the Concise Encyclopedia of Economics:

• Robbins’ most famous book was An Essay on the Nature and Significance of Economic Science, one of the best-written prose pieces in economics. That book contains three main thoughts. First is Robbins’ famous all-encompassing definition of economics that is still used to define the subject today: “Economics is the science which studies human behavior as a relationship between given ends and scarce means which have alternative uses.”…

Political economy :

• Political Economy or Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing.
• Thus it is on the one side a study of wealth; and on the other, and more important side, a part of the study of man. For man’s character has been moulded by his every-day work, and the material resources which he thereby procures, more than by any other influence unless it be that of his religious ideals; and the two great forming agencies of the world’s history have been the religious and the economic. Here and there the ardour of the military or the artistic spirit has been for a while predominant: but religious and economic influences have nowhere been displaced from the front rank even for a time; and they have nearly always been more important than all others put together. Religious motives are more intense than economic, but their direct action seldom extends over so large a part of life. For the business by which a person earns his livelihood generally fills his thoughts during by far the greater part of those hours in which his mind is at its best; during them his character is being formed by the way in which he uses his faculties in his work, by the thoughts and the feelings which it suggests, and by his relations to his associates in work, his employers or his employees.

Many people hear the word “economics” and think it is all about money. Economics is not just about money. It is about weighing different choices or alternatives. Some of those important choices involve money, but most do not. Most of your daily, monthly, or life choices have nothing to do with money, yet they are still the subject of economics.

For example : your decisions about whether it should be you or your roommate who should be the one to clean up or do the dishes, whether you should spend an hour a week volunteering for a worthy charity or send them a little money via your cell phone, or whether you should take a job so you can help support your siblings or parents or save for your future are all economic decisions. In many cases, money is merely a helpful tool or just a veil, standing in for a partial way to evaluate some of the goals you really care about and how you make choices about those goals.

• You might also think economics is all about “economizing” or being efficient–not making foolish or wasteful choices about how you spend or budget your time and money. That is certainly part of what economics is about. However, that’s just the tip of the iceberg. We all know that we can save money or time by being more efficient in our planning. A trip to the supermarket can be coordinated with a trip to take your child to school or to deposit a check at the bank across the street to save on gas. But we sometimes don’t choose the most efficient options. Why not? Economics is also about plumbing the depths of why we sometimes do and sometimes don’t make what seem like the most economizing or economical choices.
• Is economics a science (like physics), or is it a social science, or even an art? What is the difference, and what do we know about what we can’t or don’t know for now? Can economic problems be solved by better government, more experts, bigger computers, more engineering, better education, less government, more dispersed knowledge, more markets? How can we make informed choices?
• You’ve probably heard that economists disagree about a lot of things. Actually, what economists disagree about is politics or public policy, not economics. Exploring the interface between politics and economics is part of the fun.

Difficult of Forecasting :

When it comes to forecasting inflation, you can make best estimates, but there is always an element of unpredictability. For example, in 2012, the Bank of England forecast the inflation rate would fall. This seems a reasonable forecast on the basis that

• wage inflation is low
• economic growth is low.
• Temporary cost push factors should expire.

However, you can never predict the future with certainty. There could be another oil price shock (e.g. war in Iran). If the economy recovered quicker than expected, we may also see a return of demand pull inflation.

Another issue could be the inflationary impact of quantitative easing. Usually, economic theory would suggest that increasing the money supply would cause inflation (link between money supply and inflation). However, there are always many variables to take into account.

Increasing the money supply in a liquidity trap may not cause any inflation at all. Because banks just hoard the increase in the monetary base.

This is an example of how you can get different opinions. One group of economists say increasing the money supply will cause inflation. Another group will say – however, in the circumstance of recession, increasing the money supply will not cause inflation.

Both opinions are theoretically possible. You could make a case for either. It depends on how people behave and respond to this increase in the money supply. It depends on prospects for economic recovery, which may depends on economic growth in the European Union.

Economics is not an exact science, because we are dealing with many variables which are hard to control and isolate. For example, the impact of quantitative easing depends on the attitudes of bankers and consumers. If bankers feel really confident, they may decide to lend the extra money causing growth and inflation. If they are worried about the economic climate, they may not lend any extra money and therefore there will be no inflation.

Therefore, an element of economic forecasting is effectively trying to guess people’s psychology. Will they be reckless and spend or cautious and save? This is why economic forecasting is often incorrect. There are too many variables which are difficult to predict.

World Opinion on the Global Economy :

• Views of the international role of global corporations are mixed. Generally speaking, people are inclined to believe they have a positive influence internationally, but also lean toward not trusting them to operate in the best interests of their society. Africans, especially, hold a very positive view of global corporations and trust them to operate in the best interests of their society

The World Bank and IMF :

• In general, majorities in most countries express a positive view of the influence of international financial institutions, including the World Bank and the International Monetary Fund (IMF). While both get mildly positive ratings in nearly all countries, the World Bank is more popular than the IMF and a few countries, particularly Argentina and Brazil, have distinctly negative views of the IMF. Publics in many beneficiary countries show high levels of enthusiasm, while those in donor countries are more modest in their support, though still predominantly positive.

International Regulation of Financial Institutions :

• Global publics show very strong support for the broad idea of having a global regulating body to ensure that big financial institutions follow international standards. However publics are divided on whether nations should be free to regulate their own banks that operate internationally. This suggests that some people have not thought through the implications of international regulation of financial institutions