People have to make choices because of scarcity, the fact that they don’t have enough resources to satisfy all their wants. Economics studies how people allocate resources among alternative uses.Macroeconomics studies national economies, and microeconomics studies the behavior of individual people and individual firms.

The worldwide Great Recession of 2007 to 2009 began in the economy when a housing bubble in the United States popped in 2006. Trillions of dollars had been invested in the financial markets on the premise that residential housing prices would never decline significantly.As the bubble burst and home prices began to plummet, the economy took a hit as dozens of large banks as well as many hundreds of financial firms were threatened with bankruptcy.

Over the last 50 years, the U.S. economy has grown at an average annual rate of about 2.8 percent. Roughly 1.1 percent has come from population growth: the country typically adds more workers each year. But the majority of it comes from the fact that it gets more productive each year — to the tune of about 1.7 percent annually.

Forecasting what will happen in the economic future is hard. Nobody gets it right all the time. However, with a grounding in economic indicators, you can improve your investment results and the profitability of your business.How are economic indicators relevant to you?Economic indicators were first published for government leaders who needed a better understanding of the country’s current economic condition.

Behavioral economics is about bringing reality into economic analysis. It borrows from psychology, sociology, politics, and institutional economics (which focuses on the rules of the economic game) to describe and explain human behavior and economic phenomena.Behavioral economics builds upon conventional economics, offering more tools for understanding why people behave the way they do when it comes to income, wealth, ethics, and fairness.

Macroeconomics is the study of the economy as a whole. What follows are summaries of some key information about how the economy works, including the basics of fiscal and monetary policy, the key summary statistics that macroeconomists examine in order to assess the health of an economy, and how the economy behaves in the short- and long-term.

Microeconomics is that part of economics that looks at the world from the perspective of consumers and firms — asking how they make their decisions and how those decisions come together to make different kinds of markets. You do that by building models of different situations that explore the results of different types of conditions.

Markets rely on participants engaging in mutually beneficial exchange. If participants are free to choose, they trade only if they perceive a personal gain. Thus, the consumer buys the goods and services that give them the most satisfaction relative to the price they pay, while businesses sell the goods and services that generate the most or maximum profit.

Economics is the science that studies how people and societies make decisions that allow them to get the most out of their limited resources. Because every country, every business, and every person deals with constraints and limitations, economics is literally everywhere. This Cheat Sheet gives you some of the essential information about economics.