Chapter 2 An Approach to Economics—Bottoms Up

Economics is sometimes described as a social science that focuses on decisions about the allocation of limited resources. This definition is broad and acknowledges that economics may not always only involve commercial decisions. It could study the decision process of someone with a limited amount of time that has to allocate between going to a party or to the gym. This book takes the approach that finance and the study of investments are subsets of economics. Finance focuses on investments, assets, liabilities, uncertainty and risk over time and is sometimes defined as the science of managing money and funding activities.

The economic philosophy that influences this book is that all economics starts ...

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