An economy (from Greek οίκος – "household" and νέμoμαι – "manage") is an area of the production, distribution, or trade, and consumption of goods and services by different agents. Understood in its broadest sense, 'The economy is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the production, use, and management of resources'. Economic agents can be individuals, businesses, organizations, or governments. Economic transactions occur when two parties agree to the value or price of the transacted good or service, commonly expressed in a certain currency. However, monetary transactions only account for a small part of the economic domain.
Economic activity is spurred by production which uses natural resources, labor, and capital. It has changed over time due to technology (automation, accelerator of process, reduction of cost functions), innovation (new products, services, processes, expanding markets, diversification of markets, niche markets, increases revenue functions) such as, that which produces intellectual property and changes in industrial relations (for example, child labor being replaced in some parts of the world with universal access to education).
A given economy is the result of a set of processes that involves its culture, values, education, technological evolution, history, social organization, political structure and legal systems, as well as its geography, natural resource endowment, and ecology, as main factors. These factors give context, content, and set the conditions and parameters in which an economy functions. In other words, the economic domain is a social domain of human practices and transactions. It does not stand alone.
A market-based economy is one where goods and services are produced and exchanged according to demand and supply between participants (economic agents) by barter or a medium of exchange with a credit or debit value accepted within the network, such as a unit of currency.
A command-based economy is one where political agents directly control what is produced and how it is sold and distributed.
A green economy is low-carbon, resource efficient, and socially inclusive. In a green economy, growth in income and employment is driven by public and private investments that reduce carbon emissions and pollution, enhance energy and resource efficiency, and prevent the loss of biodiversity and ecosystem services.
A gig economy is one in which short-term jobs are assigned via online platforms and a programmable economy is the set of revolutionary changes taking place in the global economy due to technology innovations. ✓[(per capita income is the income per head it is derived by dividing the national income by population)].
Today the range of fields of study examining the economy revolves around the social science of economics, but may include sociology (economic sociology), history (economic history), anthropology (economic anthropology), and geography (economic geography). Practical fields directly related to the human activities involving production, distribution, exchange, and consumption of goods and services as a whole are engineering, management, business administration, applied science, and finance.
All professions, occupations, economic agents or economic activities, contribute to the economy. Consumption, saving, and investment are variable components in the economy that determine macroeconomic equilibrium. There are three main sectors of economic activity: primary, secondary, and tertiary.
Due to the growing importance of the economical sector in modern times, the term real economy is used by analysts as well as politicians to denote the part of the economy that is concerned with the actual production of goods and services, as ostensibly contrasted with the paper economy, or the financial side of the economy, which is concerned with buying and selling on the financial markets. Alternate and long-standing terminology distinguishes measures of an economy expressed in real values (adjusted for inflation), such as real GDP, or in nominal values (unadjusted for inflation).
The English words "economy" and "economics" can be traced back to the Greek word οἰκονόμος (i.e. "household management"), a composite word derived from οἶκος ("house;household;home") and νέμω ("manage; distribute;to deal out;dispense") by way of οἰκονομία ("household management").
The first recorded sense of the word "economy" is in the phrase "the management of œconomic affairs", found in a work possibly composed in a monastery in 1440. "Economy" is later recorded in more general senses, including "thrift" and "administration".
The most frequently used current sense, denoting "the economic system of a country or an area", seems not to have developed until the 1650s.
As long as someone has been making, supplying and distributing goods or services, there has been some sort of economy; economies grew larger as societies grew and became more complex. Sumer developed a large-scale economy based on commodity money, while the Babylonians and their neighboring city states later developed the earliest system of economics as we think of, in terms of rules/laws on debt, legal contracts and law codes relating to business practices, and private property.
The Babylonians and their city state neighbors developed forms of economics comparable to currently used civil society (law) concepts. They developed the first known codified legal and administrative systems, complete with courts, jails, and government records.
The ancient economy was mainly based on subsistence farming. The Shekel referred to an ancient unit of weight and currency. The first usage of the term came from Mesopotamia circa 3000 BC., and referred to a specific mass of barley which related other values in a metric such as silver, bronze, copper etc. A barley/shekel was originally both a unit of currency and a unit of weight, just as the British Pound was originally a unit denominating a one-pound mass of silver.
For most people, the exchange of goods occurred through social relationships. There were also traders who bartered in the marketplaces. In Ancient Greece, where the present English word 'economy' originated, many people were bond slaves of the freeholders. The economic discussion was driven by scarcity.
In Medieval times, what we now call economy was not far from the subsistence level. Most exchange occurred within social groups. On top of this, the great conquerors raised what we now call venture capital (from ventura, ital.; risk) to finance their captures. The capital should be refunded by the goods they would bring up in the New World. The discoveries of Marco Polo (1254–1324), Christopher Columbus (1451–1506) and Vasco da Gama (1469–1524) led to a first global economy. The first enterprises were trading establishments. In 1513, the first stock exchange was founded in Antwerpen. Economy at the time meant primarily trade.
The European captures became branches of the European states, the so-called colonies. The rising nation-states Spain, Portugal, France, Great Britain and the Netherlands tried to control the trade through custom duties and (from mercator, lat.: merchant) was a first approach to intermediate between private wealth and public interest. The secularization in Europe allowed states to use the immense property of the church for the development of towns. The influence of the nobles decreased. The first Secretaries of State for economy started their work. Bankers like Amschel Mayer Rothschild (1773–1855) started to finance national projects such as wars and infrastructure. Economy from then on meant national economy as a topic for the economic activities of the citizens of a state.
The first economist in the true modern meaning of the word was the Scotsman Adam Smith (1723–1790) who was inspired partly by the ideas of physiocracy, a reaction to mercantilism and also later Economics student, Adam Mari. He defined the elements of a national economy: products are offered at a natural price generated by the use of competition - supply and demand - and the division of labor. He maintained that the basic motive for free trade is human self-interest. The so-called self-interest hypothesis became the anthropological basis for economics. Thomas Malthus (1766–1834) transferred the idea of supply and demand to the problem of overpopulation.
The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, and transport had a profound effect on the socioeconomic and cultural conditions starting in the United Kingdom, then subsequently spreading throughout Europe, North America, and eventually the world. The onset of the Industrial Revolution marked a major turning point in human history; almost every aspect of daily life was eventually influenced in some way. In Europe wild capitalism started to replace the system of mercantilism (today: protectionism) and led to economic growth. The period today is called industrial revolution because the system of Production, production and division of labor enabled the mass production of goods.
After the chaos of two World Wars and the devastating Great Depression, policymakers searched for new ways of controlling the course of the economy. This was explored and discussed by Friedrich August von Hayek (1899–1992) and Milton Friedman (1912–2006) who pleaded for a global free trade and are supposed to be the fathers of the so-called neoliberalism. However, the prevailing view was that held by John Maynard Keynes (1883–1946), who argued for a stronger control of the markets by the state. The theory that the state can alleviate economic problems and instigate economic growth through state manipulation of aggregate demand is called Keynesianism in his honor. In the late 1950s, the economic growth in America and Europe—often called Wirtschaftswunder (ger: economic miracle) —brought up a new form of economy: mass consumption economy. In 1958, John Kenneth Galbraith (1908–2006) was the first to speak of an affluent society. In most of the countries the economic system is called a social market economy.
With the fall of the Iron Curtain and the transition of the countries of the Eastern Block towards democratic government and market economies, the idea of the post-industrial society is brought into importance as its role is to mark together the significance that the service sector receives instead of industrialization. Some attribute the first use of this term to Daniel Bell's 1973 book, The Coming of Post-Industrial Society, while others attribute it to social philosopher Ivan Illich's book, Tools for Conviviality. The term is also applied in philosophy to designate the fading of postmodernism in the late 90s and especially in the beginning of the 21st century.
With the spread of Internet as a mass media and communication medium especially after 2000-2001, the idea for the Internet and information economy is given place because of the growing importance of e-commerce and electronic businesses, also the term for a global information society as understanding of a new type of "all-connected" society is created. In the late 2000s, the new type of economies and economic expansions of countries like China, Brazil, and India bring attention and interest to different from the usually dominating Western type economies and economic models.
The economy may be considered as having developed through the following Phases or Degrees of Precedence.
In modern economies, these phase precedences are somewhat differently expressed by the three-sector theory.
Other sectors of the developed community include :
There are a number of concepts associated with the economy, such as these:
The GDP (gross domestic product) of a country is a measure of the size of its economy. The most conventional economic analysis of a country relies heavily on economic indicators like the GDP and GDP per capita. While often useful, GDP only includes economic activity for which money is exchanged.
An informal economy is economic activity that is neither taxed nor monitored by a government, contrasted with a formal economy. The informal economy is thus not included in that government's gross national product (GNP). Although the informal economy is often associated with developing countries, all economic systems contain an informal economy in some proportion.
Informal economic activity is a dynamic process which includes many aspects of economic and social theory including exchange, regulation, and enforcement. By its nature, it is necessarily difficult to observe, study, define, and measure. No single source readily or authoritatively defines informal economy as a unit of study.
The terms "underground", "under the table" and "off the books" typically refer to this type of economy. The term black market refers to a specific subset of the informal economy. The term "informal sector" was used in many earlier studies, and has been mostly replaced in more recent studies which use the newer term.
The informal sector makes up a significant portion of the economies in developing countries but it is often stigmatized as troublesome and unmanageable. However the informal sector provides critical economic opportunities for the poor and has been expanding rapidly since the 1960s. As such, integrating the informal economy into the formal sector is an important policy challenge.
Antarctica (UK: or , US: (listen)) is Earth's southernmost continent. It contains the geographic South Pole and is situated in the Antarctic region of the Southern Hemisphere, almost entirely south of the Antarctic Circle, and is surrounded by the Southern Ocean. At 14,000,000 square kilometres (5,400,000 square miles), it is the fifth-largest continent. For comparison, Antarctica is nearly twice the size of Australia. About 98% of Antarctica is covered by ice that averages 1.9 km (1.2 mi; 6,200 ft) in thickness, which extends to all but the northernmost reaches of the Antarctic Peninsula.
Antarctica, on average, is the coldest, driest, and windiest continent, and has the highest average elevation of all the continents. Most of Antarctica is a polar desert, with annual precipitation of only 200 mm (8 in) along the coast and far less inland. The temperature in Antarctica has reached −89.2 °C (−128.6 °F) (or even −94.7 °C (−135.8 °F) as measured from space), though the average for the third quarter (the coldest part of the year) is −63 °C (−81 °F). Anywhere from 1,000 to 5,000 people reside throughout the year at research stations scattered across the continent. Organisms native to Antarctica include many types of algae, bacteria, fungi, plants, protista, and certain animals, such as mites, nematodes, penguins, seals and tardigrades. Vegetation, where it occurs, is tundra.
Antarctica is noted as the last region on Earth in recorded history to be discovered, unseen until 1820 when the Russian expedition of Fabian Gottlieb von Bellingshausen and Mikhail Lazarev on Vostok and Mirny sighted the Fimbul ice shelf. The continent, however, remained largely neglected for the rest of the 19th century because of its hostile environment, lack of easily accessible resources, and isolation. In 1895, the first confirmed landing was conducted by a team of Norwegians.
Antarctica is a de facto condominium, governed by parties to the Antarctic Treaty System that have consulting status. Twelve countries signed the Antarctic Treaty in 1959, and thirty-eight have signed it since then. The treaty prohibits military activities and mineral mining, prohibits nuclear explosions and nuclear waste disposal, supports scientific research, and protects the continent's ecozone. Ongoing experiments are conducted by more than 4,000 scientists from many nations.Application programming interface
In computer programming, an application programming interface (API) is a set of subroutine definitions, communication protocols, and tools for building software. In general terms, it is a set of clearly defined methods of communication among various components. A good API makes it easier to develop a computer program by providing all the building blocks, which are then put together by the programmer.
An API may be for a web-based system, operating system, database system, computer hardware, or software library.
An API specification can take many forms, but often includes specifications for routines, data structures, object classes, variables, or remote calls. POSIX, Windows API and ASPI are examples of different forms of APIs. Documentation for the API usually is provided to facilitate usage and implementation.Capitalism
Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system, and competitive markets. In a capitalist market economy, decision-making and investment are determined by every owner of wealth, property or production ability in financial and capital markets, whereas prices and the distribution of goods and services are mainly determined by competition in goods and services markets.Economists, political economists, sociologists and historians have adopted different perspectives in their analyses of capitalism and have recognized various forms of it in practice. These include laissez-faire or free market capitalism, welfare capitalism and state capitalism. Different forms of capitalism feature varying degrees of free markets, public ownership, obstacles to free competition and state-sanctioned social policies. The degree of competition in markets, the role of intervention and regulation, and the scope of state ownership vary across different models of capitalism. The extent to which different markets are free as well as the rules defining private property are matters of politics and policy. Most existing capitalist economies are mixed economies, which combine elements of free markets with state intervention and in some cases economic planning.Market economies have existed under many forms of government and in many different times, places and cultures. Modern capitalist societies—marked by a universalization of money-based social relations, a consistently large and system-wide class of workers who must work for wages, and a capitalist class which owns the means of production—developed in Western Europe in a process that led to the Industrial Revolution. Capitalist systems with varying degrees of direct government intervention have since become dominant in the Western world and continue to spread. Over time, capitalist countries have experienced consistent economic growth and an increase in the standard of living.
Critics of capitalism argue that it establishes power in the hands of a minority capitalist class that exists through the exploitation of the majority working class and their labor; prioritizes profit over social good, natural resources and the environment; and is an engine of inequality, corruption and economic instabilities. Supporters argue that it provides better products and innovation through competition, disperses wealth to all productive people, promotes pluralism and decentralization of power, creates strong economic growth, and yields productivity and prosperity that greatly benefit society.China
China, officially the People's Republic of China (PRC), is a country in East Asia and the world's most populous country, with a population of around 1.404 billion. Covering approximately 9,600,000 square kilometers (3,700,000 sq mi), it is the third- or fourth-largest country by total area. Governed by the Communist Party of China, the state exercises jurisdiction over 22 provinces, five autonomous regions, four direct-controlled municipalities (Beijing, Tianjin, Shanghai, and Chongqing), and the special administrative regions of Hong Kong and Macau.
China emerged as one of the world's earliest civilizations, in the fertile basin of the Yellow River in the North China Plain. For millennia, China's political system was based on hereditary monarchies, or dynasties, beginning with the semi-legendary Xia dynasty in 21st century BCE. Since then, China has expanded, fractured, and re-unified numerous times. In the 3rd century BCE, the Qin reunited core China and established the first Chinese empire. The succeeding Han dynasty, which ruled from 206 BC until 220 AD, saw some of the most advanced technology at that time, including papermaking and the compass, along with agricultural and medical improvements. The invention of gunpowder and movable type in the Tang dynasty (618–907) and Northern Song (960–1127) completed the Four Great Inventions. Tang culture spread widely in Asia, as the new Silk Route brought traders to as far as Mesopotamia and Horn of Africa. Dynastic rule ended in 1912 with the Xinhai Revolution, when a republic replaced the Qing dynasty. The Chinese Civil War resulted in a division of territory in 1949, when the Communist Party of China established the People's Republic of China, a unitary one-party sovereign state on Mainland China, while the Kuomintang-led government retreated to the island of Taiwan. The political status of Taiwan remains disputed.
Since the introduction of economic reforms in 1978, China's economy has been one of the world's fastest-growing with annual growth rates consistently above 6 percent. According to the World Bank, China's GDP grew from $150 billion in 1978 to $12.24 trillion by 2017. Since 2010, China has been the world's second-largest economy by nominal GDP and since 2014, the largest economy in the world by purchasing power parity (PPP). China is also the world's largest exporter and second-largest importer of goods. China is a recognized nuclear weapons state and has the world's largest standing army and second-largest defense budget. The PRC is a permanent member of the United Nations Security Council as it replaced the ROC in 1971, as well as an active global partner of ASEAN Plus mechanism. China is also a leading member of numerous formal and informal multilateral organizations, including the Shanghai Cooperation Organization (SCO), WTO, APEC, BRICS, the BCIM, and the G20. In recent times, China has been widely characterized as a global superpower.Economics
Economics () is the social science that studies the production, distribution, and consumption of goods and services.Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyzes the entire economy (meaning aggregated production, consumption, saving, and investment) and issues affecting it, including unemployment of resources (labour, capital, and land), inflation, economic growth, and the public policies that address these issues (monetary, fiscal, and other policies). See glossary of economics.
Other broad distinctions within economics include those between positive economics, describing "what is", and normative economics, advocating "what ought to be"; between economic theory and applied economics; between rational and behavioural economics; and between mainstream economics and heterodox economics.Economic analysis can be applied throughout society, in business, finance, health care, and government. Economic analysis is sometimes also applied to such diverse subjects as crime, education, the family, law, politics, religion, social institutions, war, science, and the environment.Economy of China
The socialist market economy of the People's Republic of China is the world's second largest economy by nominal GDP and the world's largest economy by purchasing power parity. Until 2015, China was the world's fastest-growing major economy, with growth rates averaging 6% over 30 years. Due to historical and political facts of China's developing economy, China's public sector accounts for a bigger share of the national economy than the burgeoning private sector. According to the IMF, on a per capita income basis China ranked 71st by GDP (nominal) and 78th by GDP (PPP) per capita in 2016. The country has an estimated $23 trillion worth of natural resources, 90% of which are coal and rare earth metals. China also has the world's largest total banking sector assets of $39.9 trillion (252 trillion CNY) with $26.54 trillion in total deposits.China is the world's largest manufacturing economy and exporter of goods. It is also the world's fastest-growing consumer market and second-largest importer of goods. China is a net importer of services products. It is the largest trading nation in the world and plays a prominent role in international trade and has increasingly engaged in trade organizations and treaties in recent years. China became a member of the World Trade Organization in 2001. It also has free trade agreements with several nations, including ASEAN, Australia, New Zealand, Pakistan, South Korea and Switzerland. The provinces in the coastal regions of China tend to be more industrialized while regions in the hinterland are less developed. As China's economic importance has grown, so has attention to the structure and health of the economy.To avoid the long-term socioeconomic cost of environmental pollution in China, it has been suggested by Nicholas Stern and Fergus Green of the Grantham Research Institute on Climate Change and the Environment that the economy of China be shifted to more advanced industrial development with low carbon dioxide emissions and better allocation of national resources to innovation and R&D for sustainable economic growth in order to reduce the impact of China's heavy industry. This is in accord with the planning goals of the central government. Xi Jinping's Chinese Dream is described as achieving the "Two 100s", namely the material goal of China becoming a "moderately well-off society" by 2021, the 100th anniversary of the founding of the Communist Party and the modernization goal of China becoming a fully developed nation by 2049, the 100th anniversary of the founding of the People's Republic. The internationalization of the Chinese economy continues to affect the standardized economic forecast officially launched in China by the Purchasing Managers Index in 2005. As China's economy grows, so does China's Renminbi, which undergoes the process needed for its internationalization. China initiated the founding of the Asian Infrastructure Investment Bank in 2015. The economic development of Shenzhen is dubbed as the next Silicon Valley in the world.In recent years, government claimed growth numbers have come under increased scrutiny, with both native and foreign financial and economic observers, as well as Chinese government officials, claiming that the government has been overstating its economic output. Examples include the provincial government in Liaoning publicly admitting that the government had been overstating GDP by 20% when publishing its economic data from 2011 to 2014. Tianjin's trillion yuan GDP claim for 2016 was in fact a third lower, at 665 billion yuan ($103 billion). Some analysts believe China's official figures for GDP growth are inflated by at least 50%. A Wall Street Journal survey of 64 select economists found that 96% of respondents think China's GDP estimates do not "accurately reflect the state of the Chinese economy". However, a paper by the National Bureau of Economic Research in 2017 argued in the opposite direction. Regarding the credibility of official data, China's premier (then Party Secretary of Liaoning Province) has been quoted as saying the GDP numbers are "man-made" and unreliable and should be used "for reference only".Economy of India
The economy of India is a developing mixed economy. It is the world's seventh-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP). The country ranks 139th in per capita GDP (nominal) with $2,134 and 122nd in per capita GDP (PPP) with $7,783 as of 2018. After the 1991 economic liberalisation, India achieved 6-7% average GDP growth annually. Since 2014 with the exception of 2017, India's economy has been the world's fastest growing major economy, surpassing China.The long-term growth prospective of the Indian economy is positive due to its young population,English profiency, corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. India topped the World Bank's growth outlook for the first time in fiscal year 2015–16, during which the economy grew 7.6%. Despite previous reforms, economic growth is still significantly slowed by bureaucracy, poor infrastructure, and inflexible labor laws (especially the inability to lay off workers in a business slowdown).India has one of the fastest growing service sectors in the world with an annual growth rate above 9% since 2001, which contributed to 57% of GDP in 2012–13. India has become a major exporter of IT services, Business Process Outsourcing (BPO) services, and software services with $154 billion revenue in FY 2017. This is the fastest-growing part of the economy. The IT industry continues to be the largest private-sector employer in India. India is the second-largest start-up hub in the world with over 3,100 technology start-ups in 2018–19. The agricultural sector is the largest employer in India's economy but contributes to a declining share of its GDP (17% in 2013–14). India ranks second worldwide in farm output. The industry (manufacturing) sector has held a steady share of its economic contribution (26% of GDP in 2013–14). The Indian automobile industry is one of the largest in the world with an annual production of 21.48 million vehicles (mostly two and three-wheelers) in 2013–14. India had $600 billion worth of retail market in 2015 and one of world's fastest growing e-commerce markets.Economy of the United Kingdom
The economy of the United Kingdom is highly developed and market-orientated. It is the fifth-largest national economy in the world measured by nominal gross domestic product (GDP), ninth-largest by purchasing power parity (PPP), and twenty second-largest by GDP per capita, comprising 3.5% of world GDP.In 2016, the UK was the tenth-largest goods exporter in the world and the fifth-largest goods importer. It also had the second-largest inward foreign direct investment, and the third-largest outward foreign direct investment. The UK is one of the most globalised economies, and it is composed of England, Scotland, Wales and Northern Ireland.The service sector dominates, contributing around 80% of GDP; the financial services industry is particularly important, and London is the world's largest financial centre. Britain's aerospace industry is the second-largest national aerospace industry. Its pharmaceutical industry, the tenth-largest in the world, plays an important role in the economy. Of the world's 500 largest companies, 26 are headquartered in the UK. The economy is boosted by North Sea oil and gas production; its reserves were estimated at 2.8 billion barrels in 2016, although it has been a net importer of oil since 2005. There are significant regional variations in prosperity, with South East England and North East Scotland being the richest areas per capita. The size of London's economy makes it the largest city by GDP in Europe.In the 18th century the UK was the first country to industrialise, and during the 19th century it had a dominant role in the global economy, accounting for 9.1% of the world's GDP in 1870. The Second Industrial Revolution was also taking place rapidly in the United States and the German Empire; this presented an increasing economic challenge for the UK. The costs of fighting World War I and World War II further weakened the UK's relative position. In the 21st century, however, it remains a global power and has an influential role in the world economy.Government involvement is primarily exercised by Her Majesty's Treasury, headed by the Chancellor of the Exchequer, and the Department for Business, Energy and Industrial Strategy. Since 1979 management of the economy has followed a broadly laissez-faire approach. The Bank of England is the UK's central bank, and since 1997 its Monetary Policy Committee has been responsible for setting interest rates, quantitative easing, and forward guidance.
The currency of the UK is the pound sterling, which is the world's fourth-largest reserve currency after the United States Dollar, the Euro and the Japanese Yen, and is also one of the 10 most-valued currencies in the world.
The UK is a member of the Commonwealth, the European Union (currently until 30 March 2019), the G7, the G20, the International Monetary Fund, the Organisation for Security and Co-operation in Europe, the World Bank, the World Trade Organization, Asian Infrastructure Investment Bank and the United Nations.Economy of the United States
The economy of the United States is a highly developed mixed economy. It is the world's largest economy by nominal GDP and the second-largest by purchasing power parity (PPP). It also has the world's seventh-highest per capita GDP (nominal) and the eleventh-highest per capita GDP (PPP) in 2016. The US has a highly diversified, world-leading industrial sector. It is also a high-technology innovator with the second-largest industrial output in the world. The U.S. dollar is the currency most used in international transactions and is the world's foremost reserve currency, backed by its science and technology, its military, the full faith of the U.S. government to reimburse its debts, its central role in a range of international institutions since World War II, and the petrodollar system. Several countries use it as their official currency, and in many others, it is the de facto currency. Its largest trading partners are China, Canada, Mexico, Japan, Germany, South Korea, United Kingdom, France, India, and Taiwan.The nation's economy is fueled by abundant natural resources, a well-developed infrastructure, and high productivity. It has the second-highest total-estimated value of natural resources, valued at $45 trillion in 2016. Americans have the highest average household and employee income among OECD nations, and in 2010, they had the fourth-highest median household income, down from second-highest in 2007. The United States has held the world's largest national economy (not including colonial empires) since at least the 1890s. It is the world's largest producer of oil and natural gas. In 2016, it was the world's largest trading nation as well as its second-largest manufacturer, representing a fifth of the global manufacturing output. The U.S. also has both the largest economy and the largest industrial sector, at 2005 prices according to the UNCTAD. The U.S. not only has the largest internal market for goods, but also dominates the trade in services. U.S. total trade amounted to $4.92 trillion in 2016. Of the world's 500 largest companies, 134 are headquartered in the US.The U.S. has one of the world's largest and most influential financial markets. The New York Stock Exchange is by far the world's largest stock exchange by market capitalization. Foreign investments made in the U.S. total almost $2.4 trillion, while American investments in foreign countries total to over $3.3 trillion. The U.S. economy is ranked first in international ranking on venture capital and Global Research and Development funding. Consumer spending comprised 71% of the U.S. economy in 2013. The U.S. has the world's largest consumer market, with a household final consumption expenditure five times larger than that of Japan. The nation's labor market has attracted immigrants from all over the world and its net migration rate is among the highest in the world. The U.S. is one of the top-performing economies in studies such as the Ease of Doing Business Index, the Global Competitiveness Report, and others.The U.S. economy experienced a serious economic downturn during the Great Recession which technically lasted from December 2007 – June 2009. However, real GDP regained its pre-crisis (late 2007) peak by 2011, household net worth by Q2 2012, non-farm payroll jobs by May 2014, and the unemployment rate by September 2015. Each of these variables continued into post-recession record territory following those dates, with the U.S. recovery becoming the second-longest on record in April 2018. Debt held by the public, a measure of national debt, was approximately 77% of GDP in 2017, ranked the 43rd highest out of 207 countries. Income inequality ranked 41st highest among 156 countries in 2017, and ranks among the highest in income inequality compared to other Western nations.Great Depression
The Great Depression was a severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States. The timing of the Great Depression varied across nations; in most countries it started in 1929 and lasted until the late-1930s. It was the longest, deepest, and most widespread depression of the 20th century. In the 21st century, the Great Depression is commonly used as an example of how intensely the world's economy can decline.The Great Depression started in the United States after a major fall in stock prices that began around September 4, 1929, and became worldwide news with the stock market crash of October 29, 1929 (known as Black Tuesday). Between 1929 and 1932, worldwide gross domestic product (GDP) fell by an estimated 15%. By comparison, worldwide GDP fell by less than 1% from 2008 to 2009 during the Great Recession. Some economies started to recover by the mid-1930s. However, in many countries the negative effects of the Great Depression lasted until the beginning of World War II.The Great Depression had devastating effects in countries both rich and poor. Personal income, tax revenue, profits and prices dropped, while international trade plunged by more than 50%. Unemployment in the U.S. rose to 25% and in some countries rose as high as 33%.Cities around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming communities and rural areas suffered as crop prices fell by about 60%. Facing plummeting demand with few alternative sources of jobs, areas dependent on primary sector industries such as mining and logging suffered the most.List of countries by GDP (nominal)
Gross domestic product (GDP) is the market value of all final goods and services from a nation in a given year. Countries are sorted by nominal GDP estimates from financial and statistical institutions, which are calculated at market or government official exchange rates. Nominal GDP does not take into account differences in the cost of living in different countries, and the results can vary greatly from one year to another based on fluctuations in the exchange rates of the country's currency. Such fluctuations may change a country's ranking from one year to the next, even though they often make little or no difference in the standard of living of its population.Comparisons of national wealth are also frequently made on the basis of purchasing power parity (PPP), to adjust for differences in the cost of living in different countries. PPP largely removes the exchange rate problem, but has its own drawbacks; it does not reflect the value of economic output in international trade, and it also requires more estimation than nominal GDP. On the whole, PPP per capita figures are less spread than nominal GDP per capita figures.The United States is the world's largest economy with a GDP of approximately $20.513 trillion, notably due to high average incomes, a large population, capital investment, moderate unemployment, high consumer spending, a relatively young population, and technological innovation. Tuvalu is the world's smallest national economy, with a GDP of about $32 million, because of its very small population, a lack of natural resources, reliance on foreign aid, negligible capital investment, demographic problems, and low average incomes.Although the rankings of national economies have changed considerably over time, the United States has maintained its top position since the Gilded Age, a time period in which its economy saw rapid expansion, surpassing the British Empire and Qing dynasty in aggregate output. Since China's transition to a market-based economy through privatisation and deregulation, the country has seen its ranking increase from ninth in 1978 to second to only the United States in 2016 as economic growth accelerated and its share of global nominal GDP surged from 2% in 1980 to 15% in 2016. India has also experienced a similar economic boom since the implementation of economic liberalisation in the early 1990s. When supranational entities are included, the European Union is the second largest economy in the world. It was the largest from 2004, when ten countries joined the union, to 2014, after which it was surpassed by the United States.The first list includes estimates compiled by the International Monetary Fund's World Economic Outlook, the second list shows the World Bank's data, and the third list includes data compiled by the United Nations Statistics Division. The IMF definitive data for the past year and estimates for the current year are published twice a year in April and October. Several economies which are not considered to be countries (the world, the European Union, and some dependent territories) are included in the lists because they appear in the sources as distinct economies. These economies are italicized and not ranked in the charts, but are listed where applicable.Macroeconomics
Macroeconomics (from the Greek prefix makro- meaning "large" + economics) is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study aggregated indicators such as GDP, unemployment rates, national income, price indices, and the interrelations among the different sectors of the economy to better understand how the whole economy functions. They also develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, saving, investment, international trade, and international finance.
While macroeconomics is a broad field of study, there are two areas of research that are emblematic of the discipline: the attempt to understand the causes and consequences of short-run fluctuations in national income (the business cycle), and the attempt to understand the determinants of long-run economic growth (increases in national income). Macroeconomic models and their forecasts are used by governments to assist in the development and evaluation of economic policy.
Macroeconomics and microeconomics, a pair of terms coined by Ragnar Frisch, are the two most general fields in economics. In contrast to macroeconomics, microeconomics is the branch of economics that studies the behavior of individuals and firms in making decisions and the interactions among these individuals and firms in narrowly-defined markets.Market economy
A market economy is an economic system in which the decisions regarding investment, production and distribution are guided by the price signals created by the forces of supply and demand. The major characteristic of a market economy is the existence of factor markets that play a dominant role in the allocation of capital and the factors of production.Market economies range from minimally regulated free market and laissez-faire systems where state activity is restricted to providing public goods and services and safeguarding private ownership, to interventionist forms where the government plays an active role in correcting market failures and promoting social welfare. State-directed or dirigist economies are those where the state plays a directive role in guiding the overall development of the market through industrial policies or indicative planning—which guides yet does does substitute the market for economic planning—a form sometimes referred to as a mixed economy.Market economies are contrasted with planned economies where investment and production decisions are embodied in an integrated economy-wide economic plan and economy’s means of production are owned and operated by a single organizational body.Mughal Empire
The Mughal Empire (Persian: گورکانیان, translit. Gūrkāniyān; Urdu: مغلیہ سلطنت, translit. Mughliyah Saltanat) or Mogul Empire was an empire in the Indian subcontinent, founded in 1526. It was established and ruled by the Timurid dynasty, with Turco-Mongol Chagatai roots from Central Asia, claiming direct descent from both Genghis Khan (through his son Chagatai Khan) and Timur, and with significant Indian Rajput and Persian ancestry through marriage alliances; the first two Mughal emperors had both parents of Central Asian ancestry, while successive emperors were of predominantly Rajput and Persian ancestry. The dynasty was Indo-Persian in culture, combining Persianate culture with local Indian cultural influences visible in its court culture and administrative customs.The beginning of the empire is conventionally dated to the victory by its founder Babur over Ibrahim Lodi, the last ruler of the Delhi Sultanate, in the First Battle of Panipat (1526). During the reign of Humayun, the successor of Babur, the empire was briefly interrupted by the Sur Empire established by Sher Shah Suri. The "classic period" of the Mughal Empire began in 1556, with the ascension of Akbar to the throne. Some Rajput kingdoms continued to pose a significant threat to the Mughal dominance of northwestern India, but most of them were subdued by Akbar. All Mughal emperors were Muslims; Akbar, however, propounded a syncretic religion in the latter part of his life called Dīn-i Ilāhī, as recorded in historical books like Ain-i-Akbari and Dabistān-i Mazāhib. The Mughal Empire did not try to intervene in native societies during most of its existence, rather co-opting and pacifying them through concilliatory administrative practices and a syncretic, inclusive ruling elite, leading to more systematic, centralized and uniform rule. Traditional and newly coherent social groups in northern and western India, such as the Marathas, the Rajputs, the Pashtuns, the Hindu Jats and the Sikhs, gained military and governing ambitions during Mughal rule which, through collaboration or adversity, gave them both recognition and military experience.Internal dissatisfaction arose due to the weakness of the empire's administrative and economic systems, leading to its break-up and declarations of independence of its former provinces by the Nawab of Bengal, the Nawab of Awadh, the Nizam of Hyderabad and other small states. In 1739, the Mughals were crushingly defeated in the Battle of Karnal by the forces of Nader Shah, the founder of the Afsharid dynasty in Persia, and Delhi was sacked and looted, drastically accelerating their decline. By the mid-18th century, the Marathas had routed Mughal armies and won over several Mughal provinces from the Punjab to Bengal. During the following century Mughal power had become severely limited, and the last emperor, Bahadur Shah II, had authority over only the city of Shahjahanabad. Bahadur issued a firman supporting the Indian Rebellion of 1857. Consequent to the rebellion's defeat he was tried by the British East India Company for treason, imprisoned, and exiled to Rangoon. The last remnants of the empire were formally taken over by the British, and the British Parliament passed the Government of India Act 1858 to enable the Crown formally to displace the rights of the East India Company and assume direct control of India in the form of the new British Raj.
At its height, the Mughal Empire stretched from Kabul, Afghanistan in the west to Arakan, Myanmar in the east, and from Kashmir in the north to the Deccan Plateau in the south, extending over nearly all of the Indian subcontinent. It was the third largest empire in the Indian subcontinent (behind the Maurya Empire and the British Raj), spanning approximately four million square kilometers at its zenith, 122% of the size of the modern Republic of India. The maximum expansion was reached during the reign of Aurangzeb, who ruled over more than 150 million subjects, nearly 25% of the world's population at the time. The Mughal Empire also ushered in a period of proto-industrialization, and around the 17th century, Mughal India became the world's largest economic and manufacturing power, responsible for 25% of global industrial output until the 18th century. The Mughal Empire is considered "India's last golden age" and one of the three Islamic Gunpowder Empires (along with the Ottoman Empire and Safavid Iran). The reign of Shah Jahan (1628–1658) represented the height of Mughal architecture, with famous monuments such as the Taj Mahal, Moti Masjid, Red Fort, Jama Masjid and Lahore Fort being constructed during his reign.Occam's razor
Occam's razor (also Ockham's razor or Ocham's razor (Latin: novacula Occami); further known as the law of parsimony (Latin: lex parsimoniae) is the problem-solving principle that essentially states that "simpler solutions are more likely to be correct than complex ones." When presented with competing hypotheses to solve a problem, one should select the solution with the fewest assumptions. The idea is attributed to English Franciscan friar William of Ockham (c. 1287–1347), a scholastic philosopher and theologian.
In science, Occam's razor is used as an abductive heuristic in the development of theoretical models, rather than as a rigorous arbiter between candidate models. In the scientific method, Occam's razor is not considered an irrefutable principle of logic or a scientific result; the preference for simplicity in the scientific method is based on the falsifiability criterion. For each accepted explanation of a phenomenon, there may be an extremely large, perhaps even incomprehensible, number of possible and more complex alternatives. Since one can always burden failing explanations with ad hoc hypotheses to prevent them from being falsified, simpler theories are preferable to more complex ones because they are more testable.Planned economy
A planned economy is a type of economic system where investment and the allocation of capital goods take place according to economy-wide economic and production plans. A planned economy may use centralized, decentralized or participatory forms of economic planning. Planned economies contrast with unplanned economies, specifically market economies, where autonomous firms operating in markets make decisions about production, distribution, pricing and investment. Market economies that use indicative planning are sometimes referred to as planned market economies.
A command economy or administrative command economy describes a country using Soviet-type economic planning which was characteristic of the former Soviet Union and Eastern Bloc before most of these countries converted to market economies. These terms highlight the central role of hierarchical administration and public ownership of production in guiding the allocation of resources in these economic systems. In command economies, important allocation decisions are made by government authorities and are imposed by law.Central planning has been used in the majority of countries adopting socialism including those based on the Soviet model, though a minority have adopted some degree of market socialism, such as the Socialist Federal Republic of Yugoslavia. Non-market socialism replaces factor markets with direct calculation as the means to coordinate the activities of the various socially-owned economic enterprises that make up the economy. More recent approaches to socialist planning and allocation have come from some economists and computer scientists proposing planning mechanisms based on advances in computer science and information technology.Outside the Eastern Bloc, a different form of planned economy operated in India during the Permit Raj era from 1947 to 1990. Government planning of the economy can also happen under other political philosophies, such as under fascism and other forms of authoritarianism. The unusually large government sector in countries like Saudi Arabia means that even though there is a free market, central government planning controls allocation of most economic resources. In the United States, the government temporarily seized large portions of the economy during World War I and World War II, resulting in a largely government-planned war economy.Political economy
Political economy is the study of production and trade and their relations with law, custom and government; and with the distribution of national income and wealth. As a discipline, political economy originated in moral philosophy, in the 18th century, to explore the administration of states' wealth, with "political" signifying the Greek word polity and "economy" signifying the Greek word "okonomie" (household management). The earliest works of political economy are usually attributed to the British scholars Adam Smith, Thomas Malthus, and David Ricardo, although they were preceded by the work of the French physiocrats, such as François Quesnay (1694–1774) and Anne-Robert-Jacques Turgot (1727–1781).In the late 19th century, the term "economics" gradually began to replace the term "political economy" with the rise of mathematical modelling coinciding with the publication of an influential textbook by Alfred Marshall in 1890. Earlier, William Stanley Jevons, a proponent of mathematical methods applied to the subject, advocated economics for brevity and with the hope of the term becoming "the recognised name of a science". Citation measurement metrics from Google Ngram Viewer indicate that use of the term "economics" began to overshadow "political economy" around roughly 1910, becoming the preferred term for the discipline by 1920. Today, the term "economics" usually refers to the narrow study of the economy absent other political and social considerations while the term "political economy" represents a distinct and competing approach.
Political economy, where it is not used as a synonym for economics, may refer to very different things. From an academic standpoint, the term may reference Marxian economics, applied public choice approaches emanating from the Chicago school and the Virginia school. In common parlance, "political economy" may simply refer to the advice given by economists to the government or public on general economic policy or on specific economic proposals developed by political scientists. A rapidly growing mainstream literature from the 1970s has expanded beyond the model of economic policy in which planners maximize utility of a representative individual toward examining how political forces affect the choice of economic policies, especially as to distributional conflicts and political institutions. It is available as a stand-alone area of study in certain colleges and universities.Socialism
Socialism is a range of economic and social systems characterised by social ownership of the means of production and workers' self-management, as well as the political theories and movements associated with them. Social ownership can be public, collective or cooperative ownership, or citizen ownership of equity. There are many varieties of socialism and there is no single definition encapsulating all of them, with social ownership being the common element shared by its various forms.Socialist systems are divided into non-market and market forms. Non-market socialism involves the substitution of factor markets and money with engineering and technical criteria based on calculation performed in-kind, thereby producing an economic mechanism that functions according to different economic laws from those of capitalism. Non-market socialism aims to circumvent the inefficiencies and crises traditionally associated with capital accumulation and the profit system. By contrast, market socialism retains the use of monetary prices, factor markets and in some cases the profit motive, with respect to the operation of socially owned enterprises and the allocation of capital goods between them. Profits generated by these firms would be controlled directly by the workforce of each firm, or accrue to society at large in the form of a social dividend. The socialist calculation debate concerns the feasibility and methods of resource allocation for a socialist system.
Socialist politics has been both internationalist and nationalist in orientation; organised through political parties and opposed to party politics; at times overlapping with trade unions, and at other times independent and critical of unions; and present in both industrialised and developing nations. Originating within the socialist movement, social democracy has embraced a mixed economy with a market that includes substantial state intervention in the form of income redistribution, regulation, and a welfare state. Economic democracy proposes a sort of market socialism where there is more decentralized control of companies, currencies, investments, and natural resources.
The socialist political movement includes a set of political philosophies that originated in the revolutionary movements of the mid-to-late 18th century and out of concern for the social problems that were associated with capitalism. By the late 19th century, after the work of Karl Marx and his collaborator Friedrich Engels, socialism had come to signify opposition to capitalism and advocacy for a post-capitalist system based on some form of social ownership of the means of production. By the 1920s, social democracy and communism had become the two dominant political tendencies within the international socialist movement. By this time, socialism emerged as "the most influential secular movement of the twentieth century, worldwide. It is a political ideology (or world view), a wide and divided political movement" and while the emergence of the Soviet Union as the world's first nominally socialist state led to socialism's widespread association with the Soviet economic model, some economists and intellectuals argued that in practice the model functioned as a form of state capitalism or a non-planned administrative or command economy. Socialist parties and ideas remain a political force with varying degrees of power and influence on all continents, heading national governments in many countries around the world. Today, some socialists have also adopted the causes of other social movements, such as environmentalism, feminism and progressivism. In 21st century America, the term socialism, without clear definition, has become a pejorative used by conservatives to taint liberal and progressive policies, proposals, and public figures.Tertiary sector of the economy
The tertiary sector or service sector is the third of the three economic sectors of the three-sector theory. The others are the secondary sector (approximately the same as manufacturing), and the primary sector (raw materials).
The service sector consists of the production of services instead of end products. Services (also known as "intangible goods") include attention, advice, access, experience, and affective labor. The production of information has long been regarded as a service, but some economists now attribute it to a fourth sector, the quaternary sector.
The tertiary sector of industry involves the provision of services to other businesses as well as final consumers. Services may involve the transport, distribution and sale of goods from producer to a consumer, as may happen in wholesaling and retailing, pest control or entertainment. The goods may be transformed in the process of providing the service, as happens in the restaurant industry. However, the focus is on people interacting with people and serving the customer rather than transforming physical goods.