How to Improve Our Standard of Living by Understanding Basic Economics

How to Improve Our Standard of Living by Understanding Basic Economics

This book makes common sense of economics and explains it

in plain and simple terms that everyone can understand

so we will be better off creating our well-being and become wealthier.

By

Pimarn Charn., Ph.D., MBA

Copyright © 2015 by Pimarn Charn

All rights reserved,

Including the right of reproduction

In whole or in part in any shape of form

Library and Archives Canada Cataloguing in Publication

Charn., Pimarn

How to Improve Our Standard of Living

by Understanding Basic Economics

This book makes common sense of economics and explains it

in plain and simple terms that everyone can understand

so we will be better off creating our well-being and become wealthier.

ISBN 978-0-9948552-0-6

To My Greatest Parent

For the greatest parents on earth who provide me with the support

to build not only my good knowledge but also my real life.

The life they suggest is to help others out whenever possible.

They say you should share your knowledge with people and

give people whatever you can give to improve the good living of others.

Disclaimer

This book is written with the sole purpose of sharing information and experiences. It is hoped that readers will make use of this information to fit their needs and take their own ultimate responsibilities. This book is, therefore, provided and sold with the knowledge that the publisher and author do not offer any legal or professional advice. It is recommended that the readers consult with professional expertise before proceeding with any decision.

This book does not contain all information available on the subjects discussed. Rather it contains only information that the author did made every effort to compile from various researches. There are no representations or warranties, express or implied, about the completeness, accuracy, reliability, or suitability with respect to the information contained in this book for any purpose. References are also provided for informational purposes only and do not constitute any endorsement, support, or guarantee of this information. Any use of this information is solely at the readers own judgment, responsibility, and risk.

Also, the author has made the best of his ability to explain them in a simple way. The methods describe within this book are the author’s personal thoughts. They are not intended to be a definitive set of instructions. This book should, therefore, serve only as a general guide for further educating or learning and not as the ultimate source of this subject matter. The readers must analyze the information, make their own judgment, and use responsibility. The publisher and author shall not have any liability or responsibility to any person or entity incurring directly or indirectly from using the information contained in this book.

Why this book was written and why you should read it.

We wrote this book because we would like you, the reader, who could be either a student or a non-student of economics, to understand basic economic information. We would like you to make use of this information and decide how you want to see your life from here on out. Most importantly, you should improve your life and well-being at the bottom line. However, reading alone won’t change your life and your well-being – you must apply the knowledge and skills, too.

Even if it is only just one idea that you can get out of this book and/or expand it to suit your condition, it will be worth your time and resources to read this book.

I recall my time during 2008 to 2010 when I was searching for some answers to find my way out of being employed so I could become free financially. I have to be honest that I read most, if not all, books that are available in the Alberta and Ontario public libraries on one specific subject.

The specific subject that I thought would suit me and help me find my way out. Several books said things in similar ways, but I found none of the specific answers I was searching for.

Then, I started re-reading some selected books again, but this time with my mindset more open, thinking of what I read and extending it beyond the message. Surprisingly, it was only one specific idea that popped up from reading all the stacks of books that had lead me to the answer I was searching for during those three years.

This book that you are about to read is not meant to share with you what I found and what my answer was. It is not the objective of this book, but I would like you to think and do the same.

Each of us should apply of the information in a different way because we are living in different situations. This book and the next book, which is part of our plan, are to summarize ideas and/or messages that we all know from school or media. However, we try to do it as short as possible and to include some suggestions that you can extend and apply them to your real life.

To those students who did learn economics from school, they should realize that our teachers did a good job to make us aware of all this information. Our teachers covered all related information because it is a curriculum for learning. Some students learned it because it was part of their condition to graduate. Other students learned it because they wanted to become a specialist or become a part of research teams. However, many of these students have unfortunately forgotten that they should learn this in order to apply the knowledge to their own personal benefit.

In the real, practical world, most people have never been students of economics. They are not aware that they are part of economics and economics influence them daily in everything they do and every decision they make. Economics deal with human welfare, thereby directly impacting our well-being and/or our standard of living. Hence, it is important for everyone to know this information and make use of it to their best benefit.

We always heard from several types of sources and media regarding economics. How cheap or how expensive some specific goods or services are. What the worth of our country’s currency is to exchange with other country’s currency. What our government decides to do about their budget, monitor inflation, and adjust interest rate. Many experts write on these topics and/or talk on the media with a short or long message.

When listening to and reading about economic matter from media, most of the time, we feel as if we have been excluded out of these expert groups of people. They use a highly technical language that makes great sense to them but we cannot make any meaningful sense out of it. Needless to say that we are many times being intimidated with that information.

Having understood the basic information from this book, we will be comfortable and enjoy reading or listening more and more of what all these experts have to say or write. Most importantly, we should be able to deal better or at least more effectively with our own situation.

We must excel ourselves in all areas, especially our standard of living, because it is directly influenced by economics. It is our choice to be better. We can do it ourselves and no one else can make it happen for us unless we firstly help ourselves.

In this book, we will provide the reader only the necessary information and basic knowledge of economics. It is not intended to go in deep academically, but is purposed to apply in our real life. In the first chapter, we will introduce the meaning of economics so we won’t get intimidated with technical words. Then, we point out in the Chapter Two about the market that we live in and the competition in the market. In Chapter Three, we will understand the term called gross domestic product or GDP that we often heard from media. Each and every country uses this GDP to gage their economy.

Upon understanding the first basic three chapters, we will realize that they are surrounding us and we are living in this environment. Then, we take you, the reader, closer to the matters that involve us in the following chapters. No one can deny that we have to deal, on a day to day basis, with interest rate, employment, wage, inflation, and government policies. You will find this information in Chapters 4, 5 and 6.

By looking at the bigger picture, each and every one of us has to either directly or indirectly deal with our neighboring countries. Dealing with them could come with good and/or bad costs. Therefore, we briefly touch on the subject of globalization in Chapter 7.

In the last Chapter, but not the least, there is a conclusion. We try to convince you, the reader, that this information that you spent your time and resources to read can be applied to your real, practical life. Though we already mentioned these things along the way, we summarize what we would like to remind you of once again.

As mentioned earlier, this book is to stimulate you, the reader, and to involve you in the process. You know your situation. Only you can improve your better standard of living. By applying some of this knowledge and extending further into your real life situation, it is with the hope that you will not only improve your well-being, but also become wealthier.

Chapter 1: Economics

In this chapter, we will introduce you to the term economics. We would like you to be comfortable with this technical term so you won’t feel intimidated when hearing it from the media.

We will articulate in a certain length what factors influence economics. What is economic growth that we sometimes hear about it? We will understand the economic cycle. What is economics driven by? How is our income or money flow in the market? Do we have more than one level of economics? What other terms in economics have we already heard about?

What is economics?

Wikipedia defines economics as the social science that studies economic activity to gain an understanding of the process that governs the production, distribution, and consumption of goods and services in an economy (1). Hence, economics deals with human welfare thereby directing impact on our well-being and/or our standard of living.

Because economics deal with production, distribution, consumption, and human well-being, it studies how a household or individual firms and government make choices and how these choices impact society in terms of using its available resources.

Why did each individual make a different choice to work in a different, specific profession? Why did we decide to buy or consume different goods and services at different prices? Economics study this behavior and relate it to the condition of each location such as community, city, and country.

Economics will help us gain a meaningful sense out of the above behavior. Then, as a whole, country, individual, firms, and government have helped together to improve the economy which directly enhances the standard of living and/or well-being for most people, if not all, in that society.

What are factors that influence economics?

Generally, there are five factors that influence society’s behavior to be active in economics. These five factors are trade-offs, incentives, exchange, information, and distribution