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The development of modern economists began in 17-th century. Since that time economists have developed methods for studying and explaining how individuals, business and nations use their available economic resources. Large corporations use economists to study the way they do business and to suggest methods for making more efficient use of their employees, equipment, factories and other resources.
Economists have two ways of looking at economics and the economy. One is macro approach and the other is the micro. Microeconomics is the study of the economy as whole. Microeconomics is the study of individual consumers and the business firms.
The resources that go into the creation of goods and services are called the factors of production. The factors of production include natural resources, human resources, capital and entrepreneurship.
The price paid for the use of land is called rent. The price paid for the use of labour is called wages. A factory, tools and machines are capital resources. People in business buy or sell land or natural resources if they can profit from the transaction. Profit are remains after the costs of production have been deducated from sales. Bad economic times affect small business more then they do big business. Small business profits tend to fall faster and small business are more likely to fail.
Money can be anything that is generally accepted in payment for goods and services. The relationship between the amount of money in circulation and level of business activity is direct.
When the money supply is increased; consumer spending and business spending tend to increase with it. It follows that in time of contraction and recession, an increase in the money supply will help to bring about economic recovery.
The economy is simply an abstraction that refers to the sum of all our individual how to allocate scarce resources.
A rise in the average price is reffered to as inflation. Inflation is an increase in the average level of prices. Not a change in any specific price. Price stability is the absence of significant changes in the average price level.
Money is important to an economy because it lowers transaction costs. Money often becomes a convenient way of measuring economic activity. A good is something tangible that is produced and consumed, often having been purchased in a market. A market is created when those who willingly supply a good, service or resource exchange with those who desire to use, control or consume a good, service or resource.