Meaning of the Economy

We find people working on farms, in offices, factories, shops, schools, colleges, hospitals, etc. We all have to work in order to earn. People work and get money income in exchange.With this money income they buy goods and services. We buy most of these goods and services to satisfy our and our family members wants. We also buy goods and services for use in business.

The work places where people work are called production units. These production units are the sources of livelihood to the people working there. Some get wages and salaries. Some get rent by renting out properties. Some get interest by lending money. The work places where people work are called production units. These production units are the sources of livelihood to the people working there. Some get wages and salaries. Some get rent by renting out properties. Some get interest by lending money. The owner of these production units gets profit. All these production units together make an economy.The term ECONOMY is generally associated with a country. But it may need not always be so. It can also be associated with city, town and village. A city's economy includes factories, shops, offices, schools, colleges, banks and all other work places located in  that city. Similarly a village economy includes farms, shops and all establishments in  that village where people work. We can even talk of a world economy which will include all production units existing in the world. Indian economy thus includes all the production units or work places existing in India.