Important and Basic concepts in Economics

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Difference between Microeconomics and Macroeconomics?

Microeconomics-: Microeconomics generally deals with the study of individuals and business decisions.

Macroeconomics-: Macroeconomics deals with the government decision that helps to revive the economy.

Macroeconomics plays an important role in a bigger economy means open economy that trades with multiple economies of countries.

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Important terms In Economics

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Nathans Natural

Repo Rate-:Repo Rate is the rate at which the banks borrows the sum of money from central bank at specified rate for short duration of time.

Reverse Repo Rate-: Re verse Repo Rate is the rate at which the banks place its assets with central bank at specified rate.

Cash Reserve Ratio-: CRR is that term at which banks places its surplus funds with central bank. However in ths case, banks does not get any interest.

Statuatory Liquidity Ratio-: S LR is that term in which banks placed its assets in the form of gold, assets in the form of liquidity placed with central bank. In this case banks gets interest.

Economics basic: Demand And Supply-: Demand and supply is the most important concept in the economics.

Demand and supply highlights the important views and place a relationship between them in economics.

Supply refers to how much market can offer. If we fail to offer require supply then it may cause loss and prices goes high.

Demand refers how much we produce according to need hail in the market.

The relationship between the Demand and supply underlie the forces behind the allocation of resources.

A. Law of Demand The law of demand states that, if all other factors remain equal, the higher the price of a good, the less people will demand that good. In other words, the higher the price, the lower the quantity demanded. The amount of a good that buyers purchase at a higher price is less because as the price of a good goes up, so does the opportunity cost of buying that good. As a result, people will naturally avoid buying a product that will force them to forgo the consumption of something else they value more. The chart below shows that the curve is a downward slope.It can demonstrates from diagram-:

The Law of Supply: Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at a higher price increases revenue.

Nathans Natural underlines some diagrams to show you the best way how to understand economics better.

This diagram shows the relationship between quantity and price.

If the production is low is respect to demand than rates goes high and increase inflation due to rise in prices of products.

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Nathans Natural

Figure reflects the trends over one decade which has been increasing over a period of time.

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Nathans Natural

This graph shows the deamnd and supply curve.

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In this graph, Employment growth track during 2007-2011.

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Nathans Natural