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A common misconception is that economics is all about money.

Economics ≠ Money

Kieran Nolan
Kieran Nolan (1 post) Economics and Business Studies Teacher View Profile

A common misconception is that economics is all about money.

Money is, of course, a big component of the subject, but at its core, economics is about choices. People, firms and governments continually make choices about how to allocate scarce resources, whether this is an education budget, what to produce or how to spend your weekend. 

Money is, of course, a big component of the subject, but at its core, economics is about choices.

For the past 40 years, the choices made by governments have followed similar patterns even when confronted by catastrophes such as the 2008 financial crisis. Interest rates are lowered, and cash is injected into the economy via commercial banks with varying degrees of success. 

The consequences of using tried and tested economic policies have arguably led to more inequality and political turmoil in the west, and faced with the latest crisis, governments and economists are beginning to think differently. The pandemic has led to money being given directly to firms and individuals, circumventing the banks and largely ignoring the classic economic fears about inflation.

Do we see a shift in economic theory?

Do we see a shift in economic theory? Will the textbooks and courses have to be adapted and changed? People living through huge changes are rarely aware of their significance until much later. Like most aspects of life, the study of economics changes and adapts. Nothing, in the end, is immutable. Everything is always just a matter of choice.