What is the Economy?


The economy means the Daily Life in which people consume things.
The wants for the goods and services is called ”material desires”.
We want various things such as delicious things, wonderful things, useful things, and fun things.


The Daily Lifeis an activity to get things. A lot of things are needed for human beings to live.
Our lives are made up of using products in all aspects of foods, clothing and housing. We participate in production activities by working out in society, and earn income to purchase the goods and services.


In short, the economy means an activity (individual behaviour) in which the individual fulfills his(or her)material desires.





Things are the "Products" needed for everyday life.
Products meet human needs and give human satisfaction.


A product is an item created by putting labor into natural resources.
For example, if you pick up a fish swimming in a natural sea and sell it at a store, it will be a product. If you pick up stones and branches from the wilderness mountains and sell them in a store, that is a product.


Besides this, tools for making goods, machines, equipments, buildings, roads, railways, airports, etc. are also products.
These tangible products are called ”Goods”.
In addition, ”Services” (Communications, Medical care, Transportation, Education, etc.) are invisible intangible products.


In short, Products are the Goods and Services produced from "Labor".







Considering the meaning of "Economy" from the standpoint of Economics, it can be regarded as two different activities. "Individual behavior" and "People's behavior in society".


When we look at the economy from "Individual behavior", we mean the behavior of daily life working to consume Goods and Services.
This can be viewed as the act of selling a product called "Labor," earning money, and buying a product called "Goods and Services."
Demand is created from the choice of buying goods. Labor supply is created from the choice of selling labor.This choice(behavior) creates the demand for the goods market and the labor supply for the labor market.


On the other hand, companies make choices to sell goods (supply) and choices to buy labor (labor demand). This choice(behavior) creates supply for the goods market and labor demand for the labor market.


These demand and supply are guided by prices, and trades in the goods and labor markets are concluded. Household and corporate behavior (sales and buy choice) conclude a market deal. Once the deal is concluded, the total amount of transactions of one country (GDP) is determined.
In other words, the individual behaviour (Choices of trading ) determines the magnitude of Gross Domestic Product(GDP).


When we try to capture the Economy from a micro point of view, "Individual behavior" is the main research theme.





By the way, the research theme of Microeconomics is the behavior of households and companies.
Action is about making decisions about the allocation of scarce resources. It is to make a choice of buying and selling.
In short, Microeconomics sees the economy as "Choice".





On the other hand, grasping the economy from ”People's behavior in society” means "Production and Distribution activities in the economic system".


An economic system is a social system that carries out resource allocation.
This means producingGoods and Services” from resources, supplying them to society, and distributing them to consumers (members of society).


In the market economy, there is a mechanism in which prices adjust the gap between supply and demand and balance the economy. This is called "Market mechanism". If the market mechanism works well, ”Full Employment” will be realized. The total amount of transactions of one country at that time is called ”Full Employment GDP”.


When we look at the economy from a macroscopic point of view, "System of Market Economy and People's Behaviors" are the main research themes.





By the way, the research theme of Macroeconomics is "Realization of Full employment" and "Economic growth". Both are research on how to increase the scale of “Value added” in one country.
In short, Macroeconomics sees the economy as ”Value added”.













【 経済 】


1 ㋐ 人間の生活に必要な財貨・サービスを生産・分配・消費する活動。




㋑ 金銭のやりくり。「わが家の―は火の車だ」


㋒ 費用や手間のかからないこと。倹約。「弁当を持っていくほうが―だ」


2 《「経国済民」「経世済民」の略》 国を治め民を救済すること。政治。




 参考 : 経済(Japanese ver.)