What is Economy ?

 

Economy is defined as a household or family and issues like financials aspect related to it. Economy can be a developing economy, developed economy or under developed economy. The economy and business of any country go hand in hand. The market forces are responsible for regulating prices in an economy. The financial positions of any economy and fluctuations in the rate of interests of loans are also governed by the forces of demand and supply of money market. An economy is called under developed economy when it has not utilized its resources to the full extent. An economy is developed when it has known how to make optimum utilization of the resources. Any economy is developing when it has just realizing how to make proper and full use of resources. Business of an economy gets affected by financial market. It can be defined as the market in which financial assets are created. Financial markets include money market, capital market and credit market.

Finance and bank are the backbone of any economy. The main function of banks include raising funds by accepting deposits, borrowing money in the inter-bank market and issuing financial instruments in the money market or a securities market. Then this money is lent to borrowers which are companies, individuals or government. A country may deposit in the bank of another country. It is called offshore banking. There are various services which are provided in offshore banking like money transmissions loans currency exchange investment management fund and investment management. Credit cards are part of the economic system of today. They are financial tools which serve two main functions like they are convenient mode for paying for goods and services. At the time of purchase, the bank or financial institutions pay on behalf of the customers and then customer has to pay back the amount in certain period.

When we talk about economy we cannot forget business. Growth of an economy is dependent on business. Every business has to use the resources which are necessary for its production. The optimum use of resources is dependent on the capability of any business. The money flow in an economy is also dependent on the stock market of country. Stock markets are regulatory ends to fluctuating rates of share prices. Every day, huge amount of money is invested in business. The prices of shares keep on changing every now and then. There are various issues of an economic like unemployment, business, finance and purchasing power. Standard of living of the people of any economy is dependent on the purchasing power of general masses. When people purchase, demand is created and more production is there. Money circulation in an economy depends upon how the people spent, their general behavior and what are regulatory forces in the market.

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