Economics Terms

Economic activities

from the definition of economics, we know that economics deals with what human beings do to satisfy their wants. Therefore ecomomic activities are easy to understand. It is what human beings do to efficiently use the resources to improve their life. For an activity to be an economic activity, it must earn a reward. Any activity that is done without the view to earn a reward is not an economic activity.
Economic activities include production and distribution of goods and services at all levels.

Economizing

Economizing means using the available resources in the best way possible to maximise satisfaction. At an individual level, economizing usually leads to reducing expenditure and saving money. However, economizing actually means making the best use of the available resources such as income.

Production

Any activity that is done to satisfy people's wants is called production. Production also involves giving services. The people who make and sell goods and services are known as producers.

Consumption

Using up of goods and services to satisfy wants is known as consumption. When we consume goods and services, we are known as consumers.

Commodity

Anything that is bought and sold for money is a commodity – including produced goods and services, inputs (such as capital or raw materials), and even labour.

Corporation

A corporation is a form of business established as an independent legal entity, separate from the individuals who own it. A major benefit, for the owners, of this form of business is that it provides for limited liability for its owners: potential losses resulting from their ownership of the company (should it lose money, face legal difficulties, or experience other problems) are limited to the amount initially invested by the owners. The owners' other personal wealth is kept separate and protected from claims against the corporation. The corporation is thus well-suited to the joint stock form of ownership.

Deficit

When expenditures are higher than the income earned, a deficit is incurred.

Surplus

A Surplus is enjoyed when income earned exceeds the expenditure.

Saving

The portion of income which is not spent on consumption. Saving can be undertaken by individuals and households, by businesses, or by governments.

Poverty

A state of having inadequate income or other resources to support a household or group of households at a basic standard of living. Poverty can be measured in absolute or relative terms.

Investment

Investment represents production which is not consumed, but rather is utilized in the production of other additional output. Investment also represents an addition to the capital stock of an economy.

Development

Economic development is the process through which a country's economy expands and improves in both quantitative and qualitative terms. Economic development requires the coming together of several different processes and conditions: the accumulation of real capital; the development of education, skills, and human capacities; improvements in governance, democracy, and stability; and changes in the sectoral make-up of the economy.

Unemployment

Individuals who would like to be employed, and are actively seeking work, but cannot find a job, are considered "officially" unemployed. Individuals who are not working, but not actively looking for work, are considered to be outside of the labour force, and hence don't count as "officially" unemployed.

Inflation

A process whereby the average price level in an economy increases over time.

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