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Finance and economics are often taught as separate subjects, but they are interrelated disciplines that influence one another in many ways.

Economics is a social science. It studies the production, consumption and distribution of goods and services, as well as larger topics such as inflation, recession, and supply and demand. It explains how a government taxes and spends. It teaches the impacts that policy and events can have on business conditions, and it gives investors a tool to use when analyzing companies and markets.

Careers in economics include teaching and research. Banks and other corporations employ economists to forecast growth, inflation, interest rates and so on. Some investors listen closely to what economists say about the markets, and others don’t.

In many respects, finance is an offshoot of economics. Individuals with economic backgrounds have made some of the most notable achievements in finance.

Finance entails the study of prices, interest rates, money flows and the financial markets. Billions of dollars are at stake when it comes to pricing loans, investments and insurance products. Finance provides the means to understand pricing and the valuation of future cash flows. It also helps investors and business managers evaluate proposals and allocate capital.

Finance degrees are common among Wall Street analysts, bankers and fund managers. Determining the fair value for many investment products is a basic part of finance. Commercial bankers and insurance brokers also often have finance backgrounds.

Historically, economics has been more concerned with the big picture, such as how a country is doing, while finance focuses on companies and industries. Both have valid uses and applications, and both are important.

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