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Finance and Economy

Finance can be defined as the fund management system where the basic principle is saving money and lending money. Finance is the science which deals with time, money and risk interrelation. This is taken care by the financial institutions. Finance is more towards the concerns regarding the value of money, the rate of returns, cost of capital, etc.

Finance always deals with wealth maximization. It focuses on money and asset management. It also informs the investors and business managers on how to evaluate business proposals and allocate capital efficiently.

There are various types of Finance which we will be discussed below:
Personal Finance which deals with an individual or a family. The activity is about the amount, its origin, security and taxation of the money required by the individual or a family for their survival.
Corporate Finance which deals with the funds necessary for the activities of the corporation.
State Finance which deals with the activities of the country, state or city. State Finance is also known as Public Finance.

Economy can be defined as the state of a country or a region with respect to the production and consumption of goods and services and supply of money. Economics is social science where it studies production, consumption and goods & services distribution. It is applied to various fields like business, law, education, etc.

Economics provides guidance and helps policy making at national level. It also helps the investor understand the national policy and business conditions which in turn helps them in predictions on companies and their stocks in the stock market.

The various type of economics will be discussed below:
Microeconomics which studies interactions between individual markets. It also focusses on supply and demand relations.
Macroeconomics also deals with the same things that Microeconomics deal with but in a larger scale. Instead of focusing on an individual, it focuses on large and national variables. These variables could be national income, inflation, and unemployment rate.

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