When it comes to weddings, parties, anniversaries, birthdays, and any other special occasion, economics play a very important role. Economies determine everything from how much to spend on a cake to how many people will attend a special event. Economists and business people understand how to keep the economy growing and thriving by keeping interest rates low, cutting costs where possible, and providing consumers with opportunities that can lead them to financial success.
The principles of economics can also be applied to human resources. Human resources are the staff of an organization that handles the hiring, training, retaining, and managing of employees. When there are fewer employees to hire, businesses have to look to outside sources to fill those vacant positions. This can include recruiting from abroad, using employee outsourcing, engaging the services of the military, or tapping the expertise of professional consultants. By employing a human resources manager, a business is ensuring that its human resources department is prepared to fill any position that arises, even if the economy has suffered a downturn.
Communism vs. Free enterprise. One of the most famous debates in economics involves the differences between Communism and free enterprise. Communism believes in centralized control of businesses; individuals don’t have as much freedom and are compelled to sell to the government in exchange for employment, goods, and services.
A central economic planning board would decide what to produce, who to produce it for, when to produce it, how much to produce, and for how long. These decisions are made without cost or consumer input since the government owns the means of production. An economy under communism is like a big control board for the economy. Consumers may choose what they want to buy; businesses may decide how much to make for their products; and governments may choose what to do with the resources.
The opposite of Communism is capitalism. capitalism is an economic system where the government controls all economic activity to increase the wealth of society as a whole. A major distinguishing factor between capitalism and communism is that capitalism promotes competition, while communism encourages large-scale exploitation of the working class. The freedom provided by capitalism allows workers the opportunity to pursue a successful career and purchase the property they desire.
Individual liberty versus extensive government control. Both communism and capitalism encourage an overall sense of individual freedom and economic freedom. However, these systems also provide extensive government control over major aspects of the economy. For example, in a communist economy, businesses are centrally planned, and consumers’ rights are severely limited. Furthermore, the health and safety of citizens are frequently threatened through arbitrary laws and regulations.
Small business systems and small town or city economies. Small town or city economies have a more diverse set of services and industries. Economists refer to such economies as “market economies” because they maintain a degree of local expertise that allows them to serve the needs of consumers and local businesses more efficiently than larger, more distant competitors. Conversely, the U.S. market economy consists of vast national scale businesses that are internationally interconnected.
International business and its impact on the economy. Just like any other type of economy, international business requires a system of rules and laws that ensure that the foreign currency exchange rates and activities of the businesses involved conform to established legal norms. In fact, the existence of international trade itself has led to the development of a number of special laws designed to govern international businesses. Additionally, international trade creates numerous cross-regional institutions that provide support for specific industries. Such institutions, such as the World Trade Organization, the European Union, and the United Nations, have created the rules and procedures that govern international business.