The Economy and economics is something that few people understand, yet it is the most important thing within our lives in terms of material well-being, and ensuring that we get everything that we need to survive and live happily.

What is economics?

To understand the economy, we must first understand economics. Economics is the study of economics and how companies and governments ensure that we get everything we need and want each day, as well as making money for themselves. Economists look at how raw materials (eg.milk) are divided between manufacturers of other products (eg.bottled milk, milkshakes and cream) inline with what shops and, ultimately, the population, want.

The United States is like many other western nations in that it is a beleiver in free market economics. This when the government allows businesses and the people to decide what is produced and in what quantity, so that the people receive whatever they need. The USSR's economy was completely controlled by the government which meant that the government decided how much the people needed. Because the government of the USSR couldn't accurately predict what the people wanted and when, the economy failed, as many people didn't get what they wanted when they needed it.

Boom and Recession

Boom and recession are terms used to describe the economy at certain points when it is growing and people can afford to buy more and when it is becoming smaller. Many economies fluctate, going between the two. This is caused by many factors, including; government, businesses themselves, banks, investment and the actions of other countries.

The best time to buy shares is in boom times, when companies are selling more, which means that their prices will go up as the business becomes worth more. However, people can also make money in recession, as some industries benifit from it (eg. cut-price stores in times when people don't have alot to spend on).