How Does the Economy Work? (Simplified)

The economy impacts every aspect of our lives, from the food we consume to the people we elect to public office. Despite the economy’s reach, however, few people are able to grasp the full extent of its importance. We’ll break it down into basics for a clearer picture.

What Is the Economy?

Economic issues are crucial to our everyday lives. The term “economy” refers to everything aimed at the production, sale, distribution and consumption of goods. It comprises companies, businesses, private and public budgets: in short, everything that aims to meet the demand for goods and services. The economy is an all-encompassing term which covers — but is not limited to — the production of commercial products and the provision of various services.