Economic Activity: Production, Distribution, Consumption
Economic Activity: Production, Distribution, and Consumption
Economic activity refers to the different processes that occur during the production and consumption of goods and services. There are three phases: production, distribution, and consumption. People obtain the resources they need to live through it. The people, groups, or institutions involved in the economy are called economic agents. There are three main types of economic agents: the family, the company, and the state.
What Is Economic
Read MoreUnderstanding Inflation and Unemployment: Causes and Impacts
Impact of Other Production Costs
Source of inflation: Increasing cost, autonomous, one of the factors involved in the production function, keeping the rest unchanged.
- The potential inflation of these costs will be higher the lower the possibility of replacing the expensive factor.
- The process is enhanced in times of buoyant demand that allow total or partial transfer of costs to prices.
Inflation of Costs and Economic Policy
Whatever the ultimate source of cost inflation, apply two main lines of economic
Read MoreUnderstanding Financial Intermediaries and Their Role
The Financial System
The financial system of a country consists of the set of institutions, financial assets, and markets, with the purpose of channeling the savings created by the spending units with surplus units to deficit spending.
Financial Intermediaries
Financial Intermediaries are the set of specialized institutions in mediating between lenders (who lend money because they have a surplus) and borrowers (who can apply for loans because they have deficits).
Types of Financial Intermediaries
Bank
Read MoreUnderstanding Money and the Financial System
The Funding Process
To consume or invest, financial resources are needed. The savings are produced by the members of a family. Companies and the state sometimes save. Why do people save? One reason is uncertainty. Saving is produced by all players, but most of the savings are done by families. The financial system consists of a set of institutions that mediate the money.
Financial intermediaries issue a series of instruments called financial assets because they generate a series of rights to their
Read MoreEconomic Concepts: Unrecorded Activity, GDP, HDI & More
Understanding Key Economic Concepts
Unrecorded Economic Activity
Unrecorded economic activity refers to economic transactions that are not officially documented or taxed. This includes activities like moonlighting and other informal work.
Gross Domestic Product (GDP)
GDP represents the total value of all goods and services produced within an economy during a specific period.
Human Development Index (HDI)
The HDI is a composite index that measures development using indicators of health, education, and
Read MoreDistribution Channels and Methods for Businesses
After the product, price, and promotion have been decided, the product or service has to be available to the consumer where and when they want to buy it. Consumers should be able to get to the product easily, and the product has to be in the right place (e.g., expensive chocolate shouldn’t be in a small grocery store) to sell well.
Channels of Distribution
Businesses need to know how to get the product to the consumer. They may use a variety of distribution channels:
- Channel 1: The manufacturer sells