by Politico Mind

Created on: December 13, 2006   Last Updated: April 13, 2007

The Importance of Economics:

The Definition of Economics:

Economics is the study of the scarcity of resources amongst a society, how a society determines to disperse its resources, and how individuals, institutions, and political bodies make decisions concerning the allocation, retention, or distribution of resources; in that resources may be raw materials, equipment, securities, assets, cash, or even time.

The Principles Points To Be Emphasized in Economics:

All things in life are influenced by the economic system. Alfred Marshall is quoted with saying: "Religion may rule your soul, but economics will rule your days."

Whether one receives an education, must enter in the military under rules of conscription, whether one can open a business, how much one must pay in taxes, how much one can eat, whether one pays for health care or receives socialized health care is largely influenced by the economic system and its relative health. Though, some blame the political system for not educating them, or the political system for over taxing them, the true culprit is an unhealthy economic system or a less than healthy economic system. There are numerous economic systems and many political systems which tend to mirror the existence of each system, for example, communist governments tend to create restrictive economic systems, where as democratic systems tend to create freer economic systems.

The American Economic Model is Called Capitalism:
The concept of capitalism is founded upon the concept of a society accruing capital which it can bind together to fund larger products. The fundamental piece of the first capitalist systems was the bank. The bank act as a central gathering point of most of societies money, which was then able to be lent in larger portions to groups to fund larger projects, which would earn a profit, which would allow more money to be placed back into the bank. Ultimately, once a banking system is created and as long as the money is lent out at a moderate pace, the amount of wealth in a society will ultimately continue to increase. It is the bank which creates more money. The political system which oversees the banking system domineers at what pace the bank can grow the money supply. For example, in the United States, banks can only lend out 25% of their money at any one time to ensure that their is not a rush on accounts being closed. If a bank lends out too much of its money, which it ultimately owes to account holders, the bank may not be able to pay out

• 1
• 2
• 3
• 4
• 5
• Next Page >>