Economy
What is an Economy?
An economy is an interconnected, interdependent group of firms, individuals, and
institutions within an area that is engaged in production, consumption, saving,
and investing.
A society that engages in trade is basically the foundation of an economy, and
in many ways an economy is similar in its form and function of an ecology
(natural system). The fundamental precept of an economy is trade, and the purest
form is free trade (and note, trade requires personal property rights). The
study of the economy is called economics, and the theory and study of economics
has developed into microeconomics (micro-scale, or firm and individual level
analysis) and macroeconomics (bigger picture, aggregate view).
How does it relate to Markets?
The economy is inextricably linked to markets. There is often a distinction
between the real economy and the financial system. The financial system or
banking system and financial markets contribute to the functioning of the real
economy in the allocation of scarce resources to their most efficient use. The
economy will impact on the movement of interest rates, prospects of companies,
supply and demand for commodities,
the ebb and flow of exchange rates between various currencies, and so-on. The banking
system like-wise, is strongly interlinked with the real economy, in its
provision of credit that provides the liquidity and funding for firms and
individuals to consume and invest, which have the impact of increasing economic
activity.
Sources and further reading:
MIT Open Course Ware -
Economics (MIT Department of Economics)
Economic Journals on the Web
Encyclopedia Britannica - Economics
Wikipedia - Economy
About.com - Economics
Investor Words - economy
The Free Dictionary - economy
Econ Guru - Introduction to Economics
Moody's Economy.com
Economics Departments, Institutes and Research Centers in the World
Graph Library:
n/a
Original Source:
http://www.econgrapher.com/encyclopedia-economy.html
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