Economics
The study of the ways in which people make a living; the study of human wants and their satisfaction; the science of production, distribution, and consumption of goods and services.
Economic System
The rules, laws, customs, and principles which govern the operation of an economy. Each economic system has its own peculiar problems and therefore produces its own solutions.
Economic Activity
All action concerned with the creation of goods and services to be in some way consumed.
Consumption
The process by which goods and services are utilized in satisfying human needs and wants.
Production
The process of creating the goods or services to be consumed.
Distribution
1. "Physical" The process of getting goods and services into the hands of consumers.
2. "Personal" The division of income among individuals.
3. "Functional" The division of income according to different types . . . wages rent, interest, profit.
Basic Agents (Factors) of Production
Land, labor, capital, and management
1. Land Natural resources.
2. Labor Human effort.
3. Capital The physical necessities for production—buildings, machinery, tools, equipment, and supplies. This term commonly refers to the money used to purchase these necessities.
4. Management The planning, coordination, and direction of production.
The Economic Revolution
The development of historical factors which culminated in the adoption of the market system (capitalism).
Factors Responsible for the Economic Revolution
1. The Renaissance (1350-1600)—the era which saw the decay of a restrictive religious spirit in favor of a spirit of skepticism and inquiry.
2. The Scientific Revolution (1500-1700)—the period of scientific experimentation and discovery which laid the foundation for the Industrial Revolution.
3. The Emergence of Nation-States (l5th-l7th centuries)—a period giving rise to royal patronage for favored industries, maritime trade, common laws, standard measures, and common currencies.
4. The Age of Exploration and Discovery (l5th-l7th centuries)—an era which provided natural wealth from the colonies in the form of gold, silver, and other raw resources.
5. The Protestant Reformation (l500-1648)—a time period encouraging enterprise and the investment of capital; a philosophical outgrowth which made interest and profit respectable.
