What is economy and how does it effect our lives????
You hear about it on the news, or hear your parents talking about it. But what is the economy? The economy is a country’s system for producing and distributing goods and services. It includes not just the government, but also people, businesses, and international markets. The way that one country produces and distributes goods affects other countries because of trade agreements. For example, if you buy something made in Japan then Japan has more money to spend on American-made things like cars and computers. This means that an economic recession can ripple out across the world. But what does this all mean for us as individuals? Let us find out!
What is the economy?
The economy is the system for producing and distributing goods and services in a country. When someone talks about the economy, they usually are talking about what's called macroeconomics. This is the study of the whole economy of a country.
Every country has an economy, even rich countries that have more money than they know what to do with. The global economy is the system of all world economies. It is made up of billions of people around the world who are doing things like buying food, making clothes, or building houses.
The way that one country produces and distributes goods affects other countries because of trade agreements. For example, if you buy something made in Japan then Japan has more money to spend on American-made things like cars and computers. This means that an economic recession can ripple out across the world.
How does it affect our lives?
The economy is a big deal. It has a lot of sway over our lives. For example, it can affect how much money we have and what kind of career we want to have.
Inflation is the rate at which prices for goods go up over time due to an increase in demand or a decrease in supply. Inflation is a big deal because it makes us poorer over time. If prices go up, but our salaries stay the same, then we will be able to buy less stuff with the same amount of money.
So how does inflation happen? There are two potential causes: Too much money chasing too few goods (this would be an inflationary boom) or too little money chasing too many goods (this would be an inflationary bust).
Another important thing to think about is economic inequality, which refers to differences in wealth among people within one country. Economic inequality is hard to measure—how do you compare someone who lives on $2 per day with someone who lives on $80,000 per year? One way to measure economic inequality is by looking at the GINI coefficient, which compares each person's income with everyone else's income in their country.
Economic inequality can lead to social problems like increased crime
Trade agreements
Trade agreements are when two or more countries make formal agreements about the amount of goods they will send to one another. Trade agreements can be negotiated in one country and then implemented in others. For example, if Mexico and the United States co-signed a trade agreement, it would mean that factories in both countries could sell their products to one another without tariffs.
Trade Agreements are important because they help people by providing jobs and making goods cheaper for everyone. When this happens, we see increased economic growth and more money is put into circulation.
Economic recessions
Recessions are times when the economy is not doing well. This means that there are more people out of work, fewer people buying things, and prices on goods can go down. For some people, this means they have less money to spend on things like food or clothing because prices are also lower. For other people, it means that they may lose their job or get laid off from their company because businesses aren't making as much money.