Meaning of Economy (What is, Concept and Definition)

What is Economy:

The economy is a social science that studies the processes of extraction, production, exchange, distribution and consumption of goods and services .Figuratively, economy means rule and moderation of expenses; saving.

The word economy comes from the Latin oeconomĭa , and is in turn from the Greek οἰκονομία (oikonomia), which is derived from the union of the Greek terms οἶκος (oikos) , which means 'house', νόμος (nomos), 'norm'.

The concept of economy encompasses the notion of how societies use scarce resources to produce goods with value, and how they make the distribution of goods between individuals.

The scarcity of resources suggests the idea that material resources are limited and it is not possible to produce an infinite amount of goods, taking into account that human desires and needs are unlimited and insatiable.

The resources are really enough, but the administration is currently wrong.Gandhi once said: “On Earth there is enough to meet everyone's needs, but not so much as to satisfy the greed of some.”

Based on this principle, the ec onomia observes human behavior as a result of the relationship between human needs and the resources available to meet those needs.

The science of economics tries to explain the functioning of economic systems and relationships with economic agents (companies or individuals), reflecting on existing problems and proposing solutions.

Thus, the investigation of the main economic problems and decision-making are based on four fundamental questions on production: what to produce ?, when to produce ?, how much to produce ?, who to produce for?

See also 7 key characteristics of globalization and cycle.

Microeconomics and macroeconomics

In Economics, two branches are fundamentally distinguished: microeconomics and macroeconomics. microeconomics studies the various forms of behavior in the individual decisions of economic agents (empr these, employees and consumers), while the macroeconomics analyzes the microeconomic processes, observing the economy as a whole and with aggregate variables (total production, inflation rates, unemployment, wages, etc.).

See also Microeconomics and Macroeconomics.

Mixed economy

The mixed economy is known as the economic system that combines elements of the planned economy or directed, which obeys the objectives and limits imposed by the State, and the free market economy.Likewise, the economic model in which the private property of capitalism and the collective property of socialism coexist.

Political economy

The concept of political economy emerged in the seventeenth century to refer to the relations of production between the three main social classes of the moment: bourgeois, landowners and proletarians.

Unlike the economic theory of physics Occurrence, according to which the land is the origin of wealth, the political economy proposed that, in reality, labor was the real source of value, from which the theory of labor-value was derived.

The concept of political economy was neglected in the nineteenth century, replaced by that of economics, which privileged a mathematical approach.Today, the term political economy is used in interdisciplinary studies whose objective is the analysis of how politics influences market behavior.

Submerged economy

As submerged economy is known all economic activity that is practiced outside the legal and tax controls.It includes from activities not declared to the treasury, to illegal economic and criminal activities, such as arms or drug trafficking, or money laundering.Because they are economic activities that are carried out outside the law, they are not listed in tax records is neither Tadisticos del Estado.

Informal economy

The informal economy includes all economic activities, the exchange of goods and services, which are hidden to evade taxes or administrative controls.Like the underground economy, it is part of the submerged economy.Some common examples of informal economy are domestic work or street sales.In all countries of the world, to a greater or lesser extent, there is the informal economy, although this causes serious economic damage to the treasury.

Underground economy

As underground economy , also known as the black market, it is designated that which is constituted by the exchanges of goods, products or services in a clandestine or illegal way.As such, it is not subject to any legal regulations, so that it usually violates the pricing or provisions in legal matters that have been imposed by the government to trade such effects.