Economics is the study of how individuals, governments, businesses and other organizations make choices that effect the allocation and distribution of scarce resources. There are two general areas of economics – microeconomics and macroeconomics. Microeconomics is the study of how individual consumers and producers make their decisions.  This includes a single person, a household, a business or a governmental organization.  Microeconomics ranges from how these individuals trade with one another, to how prices are affected by the supply and demand of goods. Also studied are the efficiency and costs associated with producing goods and services, how labor is divided and allocated, uncertainty, risk, and strategic game theory. Macroeconomics studies the overall, aggregate economy.  This can include a distinct geographical region, a country or even the whole world. Topics studied include government fiscal and monetary policy, unemployment rates, growth as reflected by changes in the gross domestic product, and business cycles that result in expansion, booms, recessions and depressions.  Two of the most common schools of economic thought are called classical and Keynesian. The classical view believes that free markets are the best way to allocate resources and the government’s role should be limited to that of a fair, strict referee. However, the Keynesian approach believes that markets sometimes don’t work well at allocating resources. Therefore, the government must step in from time to time and reallocate resources efficiently.  Most economic models are based on assumptions that humans act with rational behavior, seeking the most optimal level of benefit or utility. Though this means that some economic models may be unattainable or impossible, they do provide key insights for understanding the behavior of financial markets, governments, economies and human decisions.