What is economy?
What is economy? The word "economy" means the economic activity of mankind, as well as all relations connected with the production and distribution of goods and services. Today, the economy is considered as a system of public relations from the perspective of the concept of value. The basis of the economy is the production of goods. Without production there can be no trade, no exchange, no consumption. For the production of natural, industrial and labor resources. Due to the fact that resources are limited, they need to be used with maximum efficiency. This means that with the minimum expenditure of the relevant resources, the maximum result should be obtained. To acquire these resources, cash is needed, which can be either own or borrowed. The most important function of the economy is the ability to constantly create resources, without which all of humanity cannot do, and without which it cannot develop. One way or another, but without the help of the economy a person will not be able to satisfy his needs, especially when it comes to a world with limited resources. The economy itself is a rather complicated, but all-encompassing organism. It is this organism that allows each person or society as a whole to function successfully.
There are some economic indicators. These include inflation, deflation, capitalization, profits, living standards and others. Inflation is an unplanned increase in the cost of goods and services. Inflation leads to the fact that over time, the same amount of money can buy much less goods. An example of a state with high inflation is Zimbabwe. Deflation is a strictly opposite process, when the general price level decreases. Deflation is much less common and is, as a rule, seasonal. Deflation is typical for Japan.
Capitalization is the valuation of the company, which is calculated on the basis of annual profits, as well as the main and working capital of the company. As for the standard of living, this term means the degree of satisfaction of human needs with goods and services for one unit of time. As a rule, real income per capita is used to determine the standard of living.
One of the most important terms in the economy is profit. Profit is the positive difference between the amount of income and the amount of expenses. It is profit that is the main indicator of the company's performance. When calculating profits, often taking into account the cost, which is deducted from the number of profits (and income in particular). Cost is an estimate of the cost of resources that are used in the production of goods, as well as the cost of creating the product or service itself.