How Economics Affects My Life

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How Economics Affects My Life
Economics is a social science dealing with the production, consumption, and transfer of goods and services. While the term might conjure itself as a technical field, it has critical applications daily. It deals with how human beings strive to satiate their daily needs by use of the scarce resources. Economics thus deals with how I allocate resources in deciding what to wear, eat, and what level of education I want (Pettinger para. 4). Economics is a fundamental subject whose effect on our daily lives cannot be overlooked.
One economic aspect is the imposition of a tax. The local, state and federal taxes affect my income as they are deducted even before I receive my paycheck. Value-added taxes (VAT) change the prices of commodities by raising them higher to a certain percentage. School and sales taxes affect the costs of owning homes and the cost of products respectively (Pettinger para. 6). It is the taxes that are responsible for the security that I enjoy by paying police officers, fixing potholes, and other social amenities available to me like the community college I attend and the national park where I bask.
Another aspect is inflation which is defined as the general increase in prices of commodities over time. A while ago, $20 bill was enough to cover a movie and a dinner, but due to inflation, the amount is now insufficient (Pettinger para. 6). It is often caused by the supply and demand factors or the cost of raw materials rising and the cost of labor increases.

All these are economic terms.
Thirdly, increased interest rates in the economy have the effect of reducing money supply while the opposite is true. If the Federal Reserve deems that there is an increase in the money supply, it will increase the interest rates, and the supply will decline (Pettinger para. 4). Reduced money supply increases the scarcity of money, and I will not have as much money compared to when the interest rate was down. It will affect my purchasing pattern and vice versa.
Fourthly, the factors of production in labor, land, capital, and entrepreneurship have a massive influence on my daily life. Cheap and unregulated labor in other continents makes companies relocate to the places where raw materials and labor are cheap away from the US (Pettinger para. 3). There are thus fewer manufacturing jobs in the country which means I can no longer secure a part-time manufacturing job.
In conclusion, economics is a central branch of social science whose understanding is critical for survival. It has varied forms in which it manifests itself daily from the taxes levied and the following services we receive, the impact of inflation on purchasing power, the effect of the turbulence in the federal reserve interest rates, and the impact of the factors of production.
Work Cited
Pettinger, Tejvan. “Applying economics in everyday life.” Economics help, 2017. Web. August 13, 2018 < https://www.economicshelp.org/blog/5628/economics/applying-economics-in-everyday-life/>