Introduction to the Economics of Context

Economic thinking is an essential part of household, business, government, and Federal Reserve decision making. The context matters the most when it comes to using economics to help make decisions. Economics is all about taking human reactions and creating a way to understand how the decisions are made. The reactions would differ under a variety of economic circumstances. It is all about where one is in the business cycles and how the outside factors, such as the world economic activity as well as human perceptions, combine to create the economy that must be dealt with. It needs to be recognized that the conditions change and any business decision must be made in the context that what currently exists might not be the case going forward. Economic logic can provide crucial information for decisions that are being made by every part of the economy.