Economy and Economic Entities — Flashcards

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An economy is an organisation through which people make their living by earning income to satisfy their wants. It includes the institutions and activities where people work, earn income, produce goods…

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A national economy is the aggregate of all economic activities within a country's borders. It includes all the work, production, exchange, and consumption taking place inside the country.

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A J Brown gave the definition: "An economy is a system by which people get a living and satisfy their wants." This definition shows that an economy helps people earn income and use it to meet needs.

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An economy works through cooperation among many producers. Different producers make different parts of a product and help in producing goods that satisfy human wants. For example, a shirt may involve …

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People cannot produce everything they need by themselves, so they exchange goods and services with others. In a simple economy, this may happen by barter. In a modern economy, money is used for exchan…

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Barter system is a system where goods are exchanged for goods. It was common in simple village economies where people traded their surplus products for the goods they needed.

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A simple economy is one in which each individual specialises in the production of one commodity only and trades it for the other products needed. It uses barter exchange and existed mainly in primitiv…

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Specialisation of labour is the process in which different people take up different jobs. Each person focuses on one type of work, which increases efficiency and output because of repeated practice an…