Economics uses diagrams and graphics like this one to explain economic phenomena.
For most people, economics is all about money and finance and issues of supply and demand. While these are important elements, economics is about much more. Economics provides a framework for understanding the actions and decisions of individuals, businesses and governments. It provides a means to understand interactions in a market-driven society and for analyzing government policies that affect the families, jobs and lives of citizens.
Function
Economics is the social science that examines how individuals, businesses and entire societies manage scarce resources. Resources are, by nature, limited. Only a finite amount of land exists, for example, and people do not have unlimited time to meet all of their needs and wants. Because no resources exist in unlimited quantities, societies must establish priorities and decide how best to allocate resources in such a way that meets as many needs and wants as possible.
Features
The two main branches of economics--microeconomics and macroeconomics-examine issues of resource allocation at different levels. Microeconomics focuses on the decisions of individual consumers and businesses, examining issues related to supply and demand and the prices of goods and services. Macroeconomics adopts an economy-wide perspective, examining the economy of an entire nation. Macroeconomics considers national economic issues, such as gross domestic product and unemployment rates.
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