What is Economy, its Role, Categories of Economy System

What is Economy

The relation between the production, consumption and exchange of activities aid to usage of resources termed as Economy. In brief saying, institutions and organizations play important role in production and distribution of Goods & Services.

The distribution of goods among every individual of a society is thus an important role of Economy. It does even look into the concept of distribution of goods & services. This looks for what type of resources are to be consider and banned to have the production.

Society development tends to develop US Economy, Indian economy, China economy or any other country, which is the main source of developing nations. The Economy in a whole is an organization develops when all its resources and units do work in proper manner.

Points on Economy

This is determined in different ways, which clearly classified in below given points. There are different definitions and concepts which do define Economy as per the scenario used.

  • This is a huge set of production and consumption which has different sets of activities combining toward resources.
  • The Goods and Services of Economic sector used to fulfill the needs of a community and tends to develop the production.
  • Supply and demand in the proper way, utilizing enough human and natural resources, is a part of the system.
  • Collectively developing the trade currency by utilizing the resources in good manner.
  • Effectively utilizing all kind of sources for natural and human made mechanism to develop the life of an individual.

Economy System

In general the Economy system defined in two major categories which is Market Economy system and Command Economy system.

Market System

In a Market Economy System, every individual person owns the factors of production such as land, capital and resources. The production and distribution of goods in this type of system is in the hands of individuals who are running it with legal constraints.

The supply & demand of products here does govern the Economy. The higher the demand of supply, higher will be the workload and the wages will be high too. The circulation of work for generating products does require the pay to be paid to labor, which established by providing jobs.

Command System

In the Command Economy system the entire decision on production and involvement of the resources will be through a governed body or directly with the state.

The Government does control the production and take the decision on how much quantity of goods produced and what quantity. These systems work on the theory of developing socially desirable goals, which tends to develop every part of the state equally by providing the same platform.

History of Economy

The word derived from the Greek which means Household Management. This was first touched by Notably Aristotle, the philosophers in Greece. Since the 18th century the modern form being introduced and took forward in particular from Scotland and France.

Adam Smith, the famous Scottish Philosopher, wrote the Economic book in 1776 named The Wealth of Nations. They had a belief that, This may formed from the prehistoric bartering’s systems to money driven and moved towards credit based Economy.

Since the beginning of the 19th century the growth of international trade and technology has created stronger bonds between each country. World War II and other depressions have sent the world into a cold war which seen as depreciated by the early 20th century. Economic Globalization been seen, which has set the goals for the entire world to meet and develop individually.

Economy in Deep

There are certain points which can let you know about in depth. The understanding of the system is simpler alongside having a greater collaboration of knowledge.

  • It is a study of choice and scarcity
  • Finds the way of reconciling unlimited wants by using the resources
  • Explain the problems in living by the communities
  • Determine the term of resource cost and consumer benefits
  • Make path for collaboration of activities which results in specialization

What is the Role of Economy

Here we have got information about the way of this and the systems defined which ultimately ends for active production. In brief the Economy does give an option to every individual and government, about choosing the resources. The Resources on earth are very finite which are decreasing as the production increases.

This gives a platform to study about the environment and give choices to people to make wise decisions. The growth of Economy always necessary, but on other hand, the resources fully protected and should always focus on solving environmental problems.

The control of pollution, using natural resources wisely, and byproducts of production may used as key points in the system. You may refer this page for more information.

Where does the Economy Use?

The definition of Economy may actively utilized in the way of agricultural farming and making environmental issues during prosecution. Having a stabilized form of production by using the natural resources and not affecting the environment is the key concept of the Economy, which tends for further development of national value.

Why is it necessary to maintain the Economy by Country?

Since the globalization of Economy, every country gets their points which determine their standing in the world. The Economy does depend on every point including scarcity, jobs, growth and production. This may wisely protected to grow money. These tend to maintain the economy which are essentials in development.

What is Trade and Markets in Economy?

Every individual may educate on the concept of trade and markets. Individuals have to make decisions wisely to maintain the Economy, which does increase the jobs for distribution of goods & services. The overall concept of paying individual wages for their work and using the wage wisely does protect the Economy.