What is the importance of the economy in daily life? Reading the business press, at times, it seems that salmon-colored newspapers are removed from our daily lives. With such technical jargon, many people can see the economy as something distant or uncomfortable to attend to. However, we must know that the economy plays a key role in our day to day.
Indeed, the economy is more present in our lives than we think. But how important is the economy in our lives?
We are constantly making decisions that involve costs and benefits. This is what is known in economics as the opportunity cost, since every choice carries a benefit that we must renounce.
What is the importance of the economy in our daily life?
As we will see below, the economy is very relevant in our lives. Which makes the management of personal finances essential, among other things. This is because if we manage our expenses and income in a balanced way, we will be able to satisfy our needs and, at the same time, save in case of unforeseen events or emergencies.
In fact, personal finances themselves are the essence of the economy, as we are facing a problem of scarcity, in which we try to make the most of our resources, or what in economics is called “maximizing profit” . As resources are scarce, we must manage them correctly to satisfy our needs, which could be unlimited.
In this gigantic wheel formed by the economy, households and companies there is a situation of interdependence.
The collapse of a company means the destruction of many jobs and, therefore, the ruin of many families. When a company goes bankrupt, wealth is being destroyed. For their part, companies need domestic economies, because thanks to private consumption they will be able to continue to obtain benefits; without forgetting that it is also the domestic economies who offer them labor. From the above, therefore, we can verify the importance of the economy in companies.
What is the importance of the economy in society?
Beyond our pockets, the good performance of a country’s economy translates into prosperity for its citizens. Economic data is much more than cold figures, as well as simple statistics.
For this reason, indicators such as gross domestic product (GDP), inflation levels and the unemployment rate reflect the importance of studying the economy, since they are a faithful mirror of the progress of society as a whole. These indicators, accompanied by many others, constitute a magnificent economic and social X-ray of a country.
Furthermore, the economy is of great importance to citizens and not, on the contrary, a simple object of heated debate in parliaments. The decisions taken by a government have very important consequences on domestic economies and on companies. Applying the wrong economic measures can mean an economic cataclysm for the country, as happened in the United States in the crash of 29.
On the contrary, if sensible economic initiatives are carried out, they can be a real boost for the economy, which will contribute to improving the well-being of the population.
In a globalized world, countries are not isolated. Any national economic decision has international repercussions. It is proven that every time international trade grows, prosperity and social welfare increase. Hence, trade relations and, therefore, the economy, are a key element in international diplomacy.
The trade wars that the United States has waged with China have left a profound mark on the world economy and on the daily lives of ordinary citizens. A direct consequence of this was the increase in the price of the shopping basket.
We are in a world in which we are in a situation of interdependence. Therefore, the importance of the economy and, specifically, international trade is very remarkable, since citizens can access a greater combination of goods and services at a lower cost.
Therefore, the importance of the economy is such that it is precisely this that allows the development of nations and their citizens. And it is that, without economic prosperity there is no balance, harmony is impossible. Major recessions bring with them the destruction of jobs, poverty, social tension and are the ideal breeding ground for extremist movements.
In other words, the good performance of the economy is an essential element for social peace.
What is the importance of economics in education?
In addition, we must know that the economy also has great importance in education. In this sense, knowing the economy is useful to anticipate certain aspects of our daily lives and our personal finances.
Precisely, with regard to personal investments, knowing what inflation means will allow us to be more aware of the true profitability of our investments or of the loss of purchasing power of our savings.
Along these lines, knowledge of the general economic situation will also help you choose when is a good time to take a chance on the stock market, or to start a business. Especially if someone wants to create a company dedicated to export.
It is clear that good training in economics is increasingly necessary. Therefore, it is necessary to see the study of the economy as an investment that will allow us to better understand the reality of our daily life and gain an overview of the world economy.
Well, in education, in companies, in our day to day, in people’s lives and for everything, in general, the economy is essential to make better decisions.