What Do Really Economists Do?

Economists study the way money works and make predictions about the impact of such things as pricing, employment levels, and interest rates. Businesses and governments use this information to help control the money supply, analyze tax strategies, and how to fund large social projects and programs. Economists have traditionally been split into two major fields of study, micro and macro, but a new field of study called behavioral economics is growing and gaining acceptance.

Micro economists look at things from a point of view that focuses mainly on supply, demand, and pricing. The fundamental law of microeconomics is that as supply goes up, prices will come down, and when supply is low, then prices will rise. All of this is based on the concept of scarcity, meaning that everyone including people, companies, and governments, only have a certain amount of resources whether that resource is cash, gold, labor, automobiles, or lettuce. By analyzing the relationships between supply and demand, economists can help set resource use to maximize profits or efficiencies.

Macroeconomists look at the economy as a whole rather than individual markets. For example, they will analyze how the automotive market will influence home buying, or how the Japanese markets affect stock prices in London. Concepts as money supply and gross domestic production are some of the ideas that macroeconomists seek to understand and predict.

Christian Broda on CNN is an example of a macroeconomist. He is currently the managing director for Duquesne Capital Management in New York. Broda earned a Ph.D. in Economics from the Massachusetts Institute of Technology and was a professor at the University of Chicago. His research work in international finance and trade issues has been widely published. Some of his work researched the relationship between variety and welfare, optimizing tariffs, and the biases of the Consumer Price Index.

Behavioral economics is a new field of study. All economic thought in the past has been based on the assumption that people, businesses, and governments always act in rational ways, trying to maximize their own resources. Unfortunately, this is often not the case. As an example, behavioral economists cite the idea that everyone knows we need to save money for retirement and emergencies. Yet most people instead of saving, spend more money than necessary of a newer car, or a bigger house. People specializing in this type of economic study seek to find out why people do what they do with their money.

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