what is economics

Economics is fundamentally about scarcity and the choices we make because of it.

These questions are answered differently depending on the economic system (e.g., market economy, command economy).

Let's say you've saved \$100. You have two options:
1. Buy a new video game that costs \$60.
2. Buy two books for your economics class, which cost \$50 each (total \$100).

When we talk about demand, we're looking at the relationship between the price of a good or service and how much consumers are willing and able to buy at that price. Generally, as the price goes down, people want to buy more. This is called the Law of Demand.

As a consumer, you face choices every day. How do you pick between a new video game and saving for a trip? Economists explain this using a few key ideas:

Key goals for any economy, which macroeconomists study and try to influence, include:

These goals are often addressed through macroeconomic policy, primarily implemented by governments (fiscal policy) and central banks (monetary policy).

The interaction between AD and AS determines the overall price level and the total output (GDP) of an economy. Shifts in AD or AS cause changes in inflation, unemployment, and economic growth. For example, if AD increases faster than AS, prices might rise (inflation), and output might temporarily increase, reducing unemployment.