Question
Clarify the importance of Economics.
✓
Answer
- Introduction :
- The edge of today is economic edge.
- Most of the country of the world are connected through information technology, computer, transportation and communication with each other.
- Because of globalization, if anything happens in one country, its impact can be seen in other country also.
- Economic factors plays an important role in social life.
- Human activities compares the advantages and disadvantages from it.
- Human development depends on economic factors.
- Thus, the study of economics is more important than other social science.
- Practical importance:
- Economics is related or concern with our day to day life.
- Economic factors of world affects our day to day life.
- It affects in following way.
- International events :
- In today’s edge, because of globalization a country is not limited within the boundary but it becomes internationally.
- Event of any country affects directly or indirectly to the other country. E.g. changes in price of crude oil affects the exporter and importer countries.
- The countries connected through trade get affected by economic, monetary or trade policies of other countries.
- The countries of the world are same in some economic matter but differs also.
- If we have information about this it will be helpful in the expansion of business relations.
- In short, in modern era with increasing information available to public owing to continuously improving technology, the scope of economics in day to day life is expanding.
- If we have information of capitalist economy, communist economy and socialist economy then it will help a lot in the easy function of business.
- Similarly Chinese economy grows faster than Indian economy because of what, if we know it then we can make changes accordingly in our economy and grow as Chinese economy and it will be possible with the help of economics.
- Historical events:
- Knowledge of economics helps to understand historical events better.
- Historical events affects social and political structure of the country.
- Due to increase in the price of spices in England then they forced them to establish the East India company in India for trading and then after to maintain economic interaction they rules in India.
- For their gain through Indian industry, they imposed heavy tax and exploited the Indians, and people opposed it.
- Economic phenomenon’s like increase in price, high tax rate or poverty, unemployment, scarcity will resulted in changes in the political up-downs in any country. E.g. price of potato and onion as necessities increases will disturbs the sleep of ruling party.
- Economic important:
- Starting point of economic activity is needs or wants.
- To satisfy this wants, human earns the income and tries to spend this income on that.
- Economics studies this behaviour of human of earning income and spending income.
- Thus, the economic importance is more.
- Decision making by individuals:
- The people who does not directly involves in the economic activity in their day to day life also get benefitted from the study of economics.
- E.g. Doctors, Advocates, Film actors, Farmers etc. gets the information for saving and investment and expenses and any decisions related to income with the help from economics.
- E.g. Cheaper rate monitory policy made interest rate law and increase the profit of companies.
- Thus, they shift their savings which earns less income to the investment in share market or reality market.
- High return id obtains in high price of Gold-Silver in compare to bank interest.
- In short, they all indulge n economic decision making knowingly or unknowingly
- To understand the policy of Government:
- Economic, fiscal and monetary policies implemented by the government affects our day to day economic transactions.
- To understand these policies and to know its probable effects, study of economics is necessary.
- E.g. if the monetary policy of RBI changes, it affect on interest rate also.
- To consider its probable effects on daily and occupational transaction, and to take the decision for saving and investment the study of economics is helpful.
- People take decision according to the bank rate declared by the $RBI.$
- Professional (Occupational) Importance :
- Economics is helpful in knowing scientific principles and theories which guide professional decision making.
- Generally demand, supply, income and expenditure are related with occupation.
- The study of economics helps in all these matters.
- Specifically how to fix the price of goods or services in the different form of market, buying and selling of raw material and in the decision regarding payment to factors of production Principles of economics are helpful.
- How the national income of the country distributed among the four factors of production can be understand with theory of factor distribution.
- There are three types of human in economic world.
- Consumer, producer and labour.
- According to economic behaviour of consumer he tries to pay less price and producer intend to spend less and wants to get maximum and labour tries to get maximum remuneration. In this process economic theories guides him.
- For taking proper decision, hoe much production should produced by producer, at what price it should be sell and by which method for that, study of economics is helpful.
- In short, economics helps in the decision making process of equilibrium of consumer, price firm, production, wages of labour etc.
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