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About Economy |
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Economy is a broader term which means a system related to the distribution, production, exchange and consumption of services and goods. As the world is developing at a fast pace the meaning of economy is also changing. Todays economy is very complex and technology is growing very fast. To know more about economy one has to get into the depth of this term and has to know the types of economy. As the country's progress is related to the economy of that country. Economy involves several sector. The economy during ancient time was based on subsistence farming. The industrial revolution changed the meaning of economy.
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A country's size of economy is measured by the its GDP (Gross Domestic Product). Economy can be based on both capitalism and socialism. Capitalist economy is based on the individual collection of wealth. Whereas the socialist economy is based on the wealth of a whole community. To know more about economy check out the types of economy.
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Planned Economy – Planned economy means the decision that how much is to be produces, distributed and consumed. This type of economy also shows that in what quantity the goods are to be produced and to be sold. In this economy the government takes the decision on the benefit from by the sale of a product. This type of economy focuses on the equal distribution of wealth.
- Free Market Economy – In this type of economy the decisions of what should be produced in how much quantity is controlled by the price mechanism. This economy helps in providing job opportunities.
- Mixed Economy – In this economy the decision is taken by both government and private sector.
The economy of the world has gone through sea change in the past few decades. The industrial revolution in the 18th century led to a massive change in the economy of the world. Adam Smith, the first economist of defined the elements of the national economy. The division of labor and the system of production modified the mass production of goods. The credit for this of course goes to the industrial revolution.
The ideas of Adam Smith was strongly appreciated in England. After the World War II the word 'Economy' got a broader meaning. Here are some of the ways through which a country's economy is measured.
- Interest Rate
- National Debt
- Rate of Inflation
- Consumer spending
- Exchange Rate
- Unemployment
- Balance of Trade
- GDP
- GDP per capita
- GNP
Now one must have got fair idea about economy. In future the economy of the world will witness a drastic change. |
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