Wednesday, April, 22, 2015
Volume 28, Issue 3
What is economics?
Written by Jacob Hallberg Economics is known as the staple between any transaction known to man. Simple actions such as going to Starbucks, or getting a pack of gum from the gas station, consists of economics. Although these trivial actions may seem unprolific they have large scale impacts on the total economic status of the area you are in. Moreover, economics may and likely is simple as a concept, but there many branches of economics that add to its complexity. Thankfully, Matthew Wilson, Economics Ph.D. holder from the University of Texas and a current macroeconomics professor at FRCC’s Westminster campus has agreed to help answer some very interesting questions regarding economics.
including individual people and also organizations, like business firms.” Essentially, microeconomics is the study of individuals and companies, hence the micro. Contrastly, when Wilson was asked about macroeconomics, he stated, “Macroeconomics deals with the economy as a whole. It studies business cycles, which are the recurring periods of expansion and contraction in the general business environment. It also studies the longrun growth trend of the economy.” Despite the fact that these two different types of economics may seem to be conflicting of each other, they act as complements and are very useful when tied together. Taking these classes in two consecutive The two most common economics semesters is highly recommended. classes taken at FRCC Westminster appear to be macro and micro How does economics affect the economics. What truly is the daily lives of the FRCC students? difference between these two separate Well, economics as an idea does not branches of economics? According only deal with currency. There are to Wilson, “microeconomics focuses numerous concepts within economics on individual decision makers, that can be broadly applied to multiple
Economics at work- Photo by Robin OConnell
areas of one’s life. Take opportunity cost as an example. Wilson clearly states the true definition of opportunity cost by saying, “It is the highest valued thing that you sacrifice in order to pursue a course of action. The true cost of anything is its opportunity cost.” This applies to any action you do. Deciding whether or not to study has its own opportunity cost. Your highest value thing you sacrificed may very well be the time you could be spending with your friends, or working, and the decision to study is what you sacrificed your time for. Albeit opportunity cost may seem trivial at first, but it has a large amount of advantages when planning out the future. Deciding to pursue an education for various students is a big decision. You have an opportunity cost of the time that could have been spent elsewhere, instead you spend that time in pursuit of a degree or more knowledge.
changing. Every microtransaction creates a cascading effect that furthers or inhibits the progress of the area’s economy. The money you spend repairing your car is paid to the mechanic who can then spend that money on food for his family from a grocery store and that grocery store can then pay their workers and the workers are now capable of paying for their needs and so on and so forth. This makes decisions very hard for economist. They need to account for a myriad of details when creating an economic program. One example of the cascading effect is tax cuts. “Tax cuts increase disposable income,” explains Wilson, “ When people spend their tax cuts, the money they spend is received by the producers of goods and services. This amounts to additional income to those producers, who, in turn, spend these additional incomes, which provides even more income to the sellers who they buy from.” Economists call this the “tax The economic state of the area multiplier” because each dollar or society you are in is constantly of tax cuts cascades into multiple Story continued on page 6