Explain something that your major has trained you to do (Economics) Essay

Explain something that your major has trained you to do (Economics) - Essay Example The major distinguishing factor between an economist and a non economist is that, they have different perspective to see an event that can be as ordinary as picking some flower from the nearby market. This difference in view comes from the analytical economic forecasting that the subject teaches us to become a more rational human being. This forecasting can be made a lot complex if we consider forecasting through statistical data analysis and that might be a whole lot harder to explain to a non economist. Therefore the present article emphasis on economic logics that helps us to analyse a situation and determine the right time to take an action that might be related with economics. Analytical economic forecasting follows a chain of events that it tries to sew with one another to get to the optimum decision destination. It starts with considering the focused event and ancillary events that are present around that furthermore it tries to grasp the future events that might follow throug h in short or long run. Before moving into details it should be kept in mind that economics is a social science and any event in society that is substantially important to influence the surrounding will have an impact on the economy. Let us now analyse what sort of impact a rise in crude oil price might have on the economy from an economist point of view. To a non economist rise in crude oil price will definitely knock his head considering the higher price that he might have to pay now for gasoline; the fuel his car run on. However the wrinkles on his forehead and the anger that lays dormant deep into his heart will be multi fold if he considers the spiral of events that will follow suit a rise in crude oil price. United States of America is the largest consumer of crude oil and the third largest producer of the same. However the deficit that the country faces in terms of excess demand has to be met through import of crude oil from abroad. It is clear a rise in crude oil price will put burden on America’s balance of trade and that is not a good sign for already weakening dollars (Rand, 1-9). Crude oil is the prime form of energy in America so a price rise will result in rise in price of energy, domestic and industrial alike. Several industries nation wide (if we restrict our views beyond the national boundary) uses crude oil or its refined form diesel, petrol or gasoline as raw material; a rise in the price of the same will definitely raise the price of those related products. What would be the effect on household? A simple example can be, perishable and non perishable goods reach our market through goods vehicle that run on crude oil related products. A rise in the price of crude oil will make logistic costlier. This will reflect in higher price for the related goods such as vegetables, meats, milks and etc. Eventually this cost will have to be borne by the consumers as the producers are always in look out to shift this extra cost burden to the consume rs. This is the initiation of inflation spiral where rise in price for a product results in rise in price for other products and eventually within the economy a price related anarchy breaks down that seldom get tamed unless intervened by the government or the market force that is demand and supply interact with optimum speed to settle at a new equilibrium. The government might set a ceiling on price, or use subsidy. Whether in a free market mechanism the higher price might result in lower demand and greater supply and eventual settlement of price at a