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302 Society and Beliefs

People work together to grow things, extract raw

materials from the Earth, manufacture objects that are

sold to. CONSUMERS, and help to organize our lives

through services like banking. The. PRODUCTION and

distribution of all these things make up the economy.

WHAT TYPES OF ECONOMIES ARE THERE?

In traditional economies, people produce the goods

they need on a small scale, and sell the surplus (the

amount they do not need) at local trading centres,

known as markets. In command economies, most

economic activity is controlled by the government

rather than private companies or market forces. In a

mixed economy, some industries are privately owned

by companies and others, such as public transport,

are publicly owned and run by the government.

WHAT IS SUPPLY AND DEMAND?

In an economy, there are people who supply goods

and services at a price, and people who demand

those goods and services and pay for them. The laws

of supply and demand try to explain how and why

prices change and how producers and consumers

behave. For example, if there is a lot of demand,

prices increase. If supply is high, prices go down.

WHAT IS THE MARKET?

In economics, the market is a place, or a network,

where buyers and sellers exchange goods and services

for money. All activity in the market depends on the

supply of, and demand for, these goods and services.

WHAT IS NOT PART OF THE ECONOMY?

Domestic work, such as housework, is not considered

part of the economy, unless someone is paid to do it.

The portion of a nation’s income that is (illegally) not

declared for tax is known as the black economy.

NEW YORK STOCK EXCHANGE 3

Big companies are usually owned

by thousands of people, who

each hold a stake in the company

called a share. Shares are traded

through a stock exchange. People

invest their money in shares to

claim a portion of a company’s

profits if the company does well.

However, they risk losing money

if the company does badly and

the share price goes down.

Computers

store details of the best time to

buy and sell shares according

to their price. This means

that some trading can

happen automatically

1 DOMESTIC WORK

This woman in India handwashes her family’s clothes in the nearest

river. This kind of domestic work is not considered part of the economy.

Economy

Paper slips are dropped

to the floor after being used by

traders to scribble down prices

of the deals they have made