economy

An economy is everything involved in managing resources in a particular place.

Resources are things known as goods and services. Goods are touchable things we can own, like food or cars. Services are work you can do for pay, such as cooking food at a restaurant or repairing a car at a garage. An economy includes all of the systems, activities, and organizations that determine who gets goods and services, how many goods and services there are, and how they can be exchanged or owned.

Stores, factories, companies, governments, customers, money, trade, taxes, and many other things all work together to make up an economy. We usually specify an economy by location, as in the German economy. But it’s common for someone to refer to the economy of their own country as “the economy.” The study of economies is called economics.

Economies are often very complex and are influenced by many different factors, such as supply of natural resources, culture, government policy, weather, pandemics, and changes in technology.

Many modern countries have a market economy. In this kind of economy, a person or business owns the goods and services they produce and can decide how much they want to sell them for. Likewise, customers or buyers have money that they can decide how much they are willing to spend on goods and services. In this type of economy, prices are determined by supply and demand. Goods and services that are rare or greatly desired by many people have a high price, while goods and services that are plentiful or less-wanted things have a low price.

By comparison, in a command economy a government decides how goods and services will be distributed and industries are mostly owned by the public.

The first records of the word economy come from around 1520. It ultimately comes from the Greek word oikonomíā, meaning “household management.”

Generally speaking, the world’s oldest economies go all the way back to prehistoric humans who traveled around, hunting and gathering food and supplies, which we call a traditional economy. Because money didn’t exist back then, we believe the community shared everything they gathered. Who got what food and supplies was decided according to strict society rules, whose main goal was to ensure everyone was fed.

Today, the state of a nation’s economy is often one of the most important issues in society. Poor or failing economies can lead to major problems, like widespread starvation or violent uprisings against the government. Our lives are impacted by the economies of the places we live every day because it is the economy that determines if we can eat, how much money we make, and how much everything costs.

Thanks to advances in technology, especially the internet, the economy of the entire world can be tracked and analyzed. Economists and economic planners will often consider the state of the “global economy” when giving advice or making observations.

People are always very interested in the state of the economy.

Is the failing economy going to be issue number 1 in the elections?

— THE NEWSHOUR (@thenewshour) August 30, 2013

Fastest growing economy in the world hitting the breaks

JP Morgan slashes China Q1 GDP forecast to 6.2% from 7.2%

— Lawrence McDonald (@Convertbond) March 14, 2014

• resources
• goods
• services
• distribution
• production
• trade
• business
• money
• commerce

True or False?

An economy involves determining who is able to purchase goods and services and how they will get them.