Economic Guideposts

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8 Economic Guideposts
December 17, 2008

In the world today, economics is a subject that is studied and used by a lot of people. The decisions that people make can usually apply to one or more o the economic guideposts. Using these beliefs as the foundations for society will usually work and be productive, but in some instances they can be applied wrong or misused. The fact that some things are assumed by people causes problems because false statements can be used to describe economic trends. Understanding the eight guideposts is an intricate part of learning and understanding macroeconomics, and the ability to relate them to real-life situations is necessary to be successful. In many cases people ignore or misuse the guideposts in statements and actions that they take, I am going to show some of these examples and explain them in reference to all eight guideposts.

The first guidepost I am going to look at is that incentives matter. This one of the most widely known and accepted guidepost for economics. It is important because companies, large or small, and people in general all use incentives to persuade others in some way. By offering an incentive to buy something, companies want people to buy their product over other company’s products. “In the end, the incentive program becomes a disincentive”. This quote is taken from an article about why sales programs are sometimes unsuccessful. This quotation and the article as a whole, are saying that people act against incentives sometimes. Although they could be offered a lot of things from a company, all people are not motivated the same way. It is contradicting the fact that economists believe that incentives do matter, but according to this article they don’t matter to everyone.

Next, the guideposts state that people choose with a purpose and will choose to economize. This is important because the ability to economize enables people to not spend all of their money just because things are out...
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