If you are in business you should understand economics.
Put simply economics is the study of how governments, businesses, and individuals make choices about how they will consume and use scare resources such as land, labour, natural resources etc.
Economics helps answer questions such as what is the best price to charge customers, how much of my product should I produce, is a potential industry going to be profitable etc.
From a government perspective economic policy is used to influence the unemployment rate, the overall growth of the economy, interest rates and the printing of money, all factors which influence consumer confidence and therefore how much they are likely to spend.
Economics claims to be a social science based on fundamental principles. However, if this were the case application of these fundamentals would achieve a stable economy where individuals were free to exchange goods and services without concerns of financial collapse or instability. Economic instability results in major interest rate fluctuations which can make or break a construction business. It creates wild variations in national currencies which can put an importer out of business in a matter of months.
Truly understanding the economy gives you tools to not only grow you business but how to expand during economic turmoil. This applies to small businesses right through to multi-billion dollar global corporations.
Ray Dalio, one of the worlds most successful Hedge Fund managers not only predicted the 2008 financial crisis but was able to side step its effects. He has created his own economic model which explains in very simple terms the fundamentals of the subject. Taking the time to watch this video will help you get a grip on what is otherwise a seemingly complicated subject. Ray has used this model to manage a multi-billion dollar portfolio ... maybe there's something to it.
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