What Is The Economy?

The term economy has various meanings and can be used in a number of different ways. For instance, an economy is any place where all agents involved in producing, distributing, and harvesting the resources use the same system to do so. An economy is also a set of interacting individuals who use the same system to reach a common goal. Economists, political scientists, and other interested parties all use the term economy to describe the ways in which economic activity links people, places, and bodies.


Many people think of economics in the broad sense of the field of study that includes such fields as law, accountancy, business, health care, and so on. But economics also has a very detailed narrow scope, often referred to as microeconomics. Microeconomics is about the decision-making process that leads up to the economic activity of individuals. In short, microeconomics is the field of study that examines the interactions between individuals in society. Most economic thinkers, including mainstream economists, would define economics in this way.

Economics distinguishes between the good and bad, the urgent and the convenient. The former are called goods in this light, while those that are not goods are called non-goods. The distribution of scarce resources, for instance, is the focus of economics. The distribution of wealth, including salaries, wealth produced by employment, profits and wealth owned by individuals, is the topic of economics. Finally, economic growth is the objective of economics, since such a goal would require individuals and institutions to make decisions that maximize their own welfare.