<Last updated 14.03.2020>
Hi! If you are interested in Economics, I’ve prepared the below to help your understanding about people’s behavior. You should take a look at this short article where I discuss the behavior of the household and its economic decisions.
A household is facing economic problems and encounters unwanted situations every day. Why? Because in the household there are people, and people need to satisfy their needs. The manager and people in the household must take decisions, the decision on who is going to work, who is going to cook, who will wash the dishes, how the disposable income will be used and more.
When talking about the economy as a whole there is no difference. All economic decisions involve answering the below questions:
> What types of goods and services to produce?
> How are they going to be produced? (combination of resources? technology?)
> For whom? how are the goods and services produced going to be distributed to the people? How can the output of the economy increase? How the economy of a country grows?
When people go to work, they provide their services in return of income/money. Money is exchanged for Goods and Services. In this case people buy goods if they have the money, thus acquiring the means to satisfy their needs and wants.
At this point you should be able to understand by now that, the more goods and services are produced and distributed to the people the more needs and wants are satisfied. So, by finding a way to measure the amount of output, or production, we have a way to understand if the economy, the economic activities of the people that is, is performing well or not.
That measure is GDP and we are going to talk about that later on.
“I hope I am clear on this one. If not, contact us on social media and we will do our best to help you.
Thank you for reading my articles and watching my videos.”