One of the most common questions among new economics students is whether the study of economics is truly a science. The answer is both ‘yes’ and ‘no’. The trouble we run into is one of first trying to define what science is, then explaining how the study of economics fits into that definition. This is a problem because the dictionary definition of ‘science’ is broad enough to include everything from mathematics to biology to behavioral anthropology.
The government uses a number of different economic measurements to determine the overall health of the economy. One of them is something known as national income. In basic terms, national income is the total amount of income earned by citizens and privately owned businesses for a specific period. The U.S. government typically measures national income annually.
Anyone who has ever been caught printing counterfeit money knows how serious the Government is about preventing this sort of crime. Yet the average consumer does not seem to understand why it is unwise for the government to just print enough money to pay its bills. It comes down to something known as the money supply.
Ever since British economist John Maynard Keynes introduced his economic theories in the 1930s, there has been an ongoing debate in the West as to whether or not those theories are legitimate. Those who believe Keynesian economics work site the success of Roosevelt’s post-World War II recovery plan that allegedly brought the U.S. out of recession. Those who disagree with Keynesian economics have plenty of their own examples they can cite. However, ask any citizen in Russia today what he/she thinks, and he/she is likely to tell you that Keynes’ ideas are hogwash.
Politicians from both sides of the aisle frequently speak of the unemployment rate as an important economic indicator. And indeed it is. However, there is some amount of deception involved in reporting this rate. Whether the deception is purposeful or not is up to voters to decide. Regardless, it should be understood that the labor force participation rate is far more important than the unemployment rate.
We all know of the existence of the Internal Revenue Service (IRS) thanks to the tax returns we file every spring. Nevertheless, how much do you really know about the agency? Do you know when it was established and for what purpose? The IRS is an interesting entity with a long history and an intriguing evolution.