What is the economy?
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What is the economy?
In a nutshell, the economy is a system where people live through a series of transactions (exchange of money and value).
Goods such as smartphones and mechanical pencils that you use, and services such as the schools and cram schools that you attend, are made available through this economic mechanism.
The three actors of the economy
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- Businesses that produce goods and services
- Households (consumers) who consume goods and services Governments that provide public services.
- The economy is made up of these three actors, within which economic activity takes place.
Between these three actors, the economy is driven by a tool called money.
Formation of the monetary economy
What is a monetary economy?
Many countries, including Japan, have adopted a monetary economy.
A monetary economy is a form of economy in which transactions are conducted using money.
So how did a monetary economy, such as the one we have today in Japan, come to be structured?
To find out, it is necessary to know a little about its history.
Economic history
When money did not yet exist, people lived a subsistence life by hunting.
However, this meant that people could not get what they wanted, depending on the time of year, the environment and other factors.
So people began to obtain the goods they wanted through barter between individuals.
This was a revolutionary idea for people at the time, but people were still troubled by the fact that the goods they wanted did not match up well with the goods the other person wanted.
So they decided to create a common value for everyone.
At the time, this was stones and shells, and this was the origin of money.
From there, money as we know it today was created using gold and copper, which are more resistant to deterioration and easier to carry.
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