Why Study Economics?

Economics is the study of how people make choices under the condition of scarcity. It is a highly relevant discipline. In fact, John Maynard Keynes famously said that

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

Economics principles such as opportunity costs, demand and supply permeate our daily lives. They can be applied to a wide-range of topics, including:

• What are the causes of the global financial crisis?
• Can and should the government do something in response to the crisis?
• How are stock prices and exchange rates determined?
• Is a goods and services tax (GST) better than an income tax?
• How to help billions of people who live in poverty?
• Should governments tax the rich more to reduce income inequality?
• Should there be free trade or should domestic infant industries be protected?
• Can appropriate policies be designed to save the environment without sacrificing economic growth?
• How can nuclear powers avoid an arms race by studying each other’s best strategies?