What is an economy?

The word economy is made up of two words Oikos means household and manage. So it is an area of the production, distribution, trade, and consumption of goods and services. The economy is a framework in which economic institution work together for social welfare and economic development.

It must have the following characteristics:

a. it is a system of individual, economic institutes and government, where all these bodies interact

b. It is never stable i.e. always changing

c. Production, consumption, and investments are economic activities

d. Economic activity and type of technology existing in an economy changes with the type of economy

e. Individuals are both producers and consumers

f. There are various regulating bodies to regulate complex economic systems. (RBI, WTO, World Bank etc.)