Economics

Economics is the study of the allocation of scarce resources among competing individuals. There are factors of production (resources) available: land and natural resources, human labour, and capital (machines, tools, and buildings). Those resources are used to produce goods and services to satisfy our need for food, shelter, and clothing, and our other needs. The economic questions are: "Who decides how to allocate those resources?" and "How should they be allocated? "

Today, resource allocation in some countries is largely government controlled. Resource allocation may also be left to individual consumers, bargaining in the marketplace and trading goods and services.

John Maynard Keynes was one of the economists who had a great influence on U.S. economic policy. It was he who advocated stabilizing the economy by the use of fiscal policy. That is, he thought that inflation could best be slowed by increasing taxes and or lowering government spending. If unemployment got too high, he proposed cutting taxes and/or increasing government expenditures. Such a strategy is known as Keynesian economics and was a guiding philosophy in the U.S. for decades (and still is for many people).

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