Economics Translated in Real Life

This ones for the Econ geeks. Some may look at Economics as a science, some may look at it as an art and some may just look at it as plain boring. But what most don’t see is that Economics is a way of living. It’s all about perspective. And once you realize that, the subject will automatically seem interesting, trust me. 

Keynesian Economics

As demand starts to rise, the real GDP of the economy rises while your prices are still constant. But then, the tables turn. Prices start to go up and GDP stops growing. It’s all fun and games until you realize that the amount of work your doing is affecting you to the extent that it just isn’t worth it anymore. There is only so much time and effort you can put into something until it starts to plateau. Life is not about doing everything at once, it’s about finding a balance. It’s about finding that point at which GDP is optimum and the price is just right (Y*). 

Negative Externalities

Not only does a firm’s pollution impact the environment. You do too. You might’ve been talking to a friend and just casually dropped an insensitive joke. Perhaps it got unknowingly too personal and that may have triggered something, leaving him/her feeling upset. Your actions affect others too. I’m not asking you to be a selfless god. You have to be a little selfish to get through in life, but control what you can control. 

Income Inequality

There will always be a gap between the rich and poor. The rich will always have an unfair advantage. But an unfair advantage doesn’t necessarily have to arise because of money. A person could just be naturally talented at singing and that may allow him/her to get into Berklee college of music. This is an unfair advantage. If there’s one thing people need to understand, it is that life is unfair and there’s nothing you can do to change it.

You can make the best of what you have and strive for more, but there will always be somebody else with an upper hand. Those who have it hard, have to work for where they want to be. Those who have it easy, you’re already there. A control experiment only works in a lab, there is no control in real life. Nobody will ever be the same, there will always be one factor or the other that affects you. 

Elasticity of Demand

Some goods are just inelastic in nature. No matter how much you pull the rubber band, it just won’t stretch. I won’t beat around the bush for this one. Let’s go with the example straight out of the textbook. Alcohol, for instance, no matter how much the price goes up, people will still buy it due to its addictive nature. When we become highly dependent on something/someone, we stick to it regardless of its impact on our physical and mental health. A toxic relationship is the best example for this context. You might be getting verbally abused, you might feel appreciated and you might not receive the time and energy that you are putting in from your partner. But for some irrational reason, you will not let go. Ok so maybe I did beat around the bush. 

Also Read – Steps to making a good comparative study

Demand and Supply in Economics

This especially applies to your career. You’re probably wondering what the world needs the most that you can provide. Because this sort of thought process will secure you a high-paying job and a great position at a booming company. For instance, our lives are slowly but rapidly shifting online and we’re moving closer to digitization. This has created a need for tech-based jobs and so everybody is trying to learn coding, data science and so on. This field has created such a huge demand, but is also highly competitive. Whereas, art on the other hand, has very little demand in society. That’s why artists are paid so little and receive very few opportunities to foster and develop their skills. Demand and supply are 2 important parts of economics and it plays a huge role in the real world, and if you want to survive we must acknowledge it. 

Unemployment

This generation has overused the word jobless way too much that the term unemployment has no meaning anymore.