The Greek word oikonomia means a household. The English word means management, as in the class "home economy". Since management always boils down to pinching pennies, the word comes to be associated with money, and especially frugality.
Did you buy something today? Let's suppose you bought a pencil. Did you buy a certain brand, or a certain color, or did you just grab one that was displayed near the checkout line? Every such decision is a vote for something about pencils, colors, and market displays. The total of all decisions in a certain area is called the economy of that area, and is measured in the local currency for convenience.
That does not mean that the measurement is the economy. If we break all the windows, does that mean the economy is enriched by the cost of their replacement? That is not an idle question. A few years ago, the federal government decided to pay people to crush their cars and buy new ones. The politicians were quite surprised to learn that a lot of that money went to foreign car makers, and prices of used car parts went out of control for a while because of the interruption in supply.
Always try to remember that economics is the study of reality.
The Greek word oikonomia means a household. The English word means management, as in the class "home economy". Since management always boils down to pinching pennies, the word comes to be associated with money, and especially frugality.
Did you buy something today? Let's suppose you bought a pencil. Did you buy a certain brand, or a certain color, or did you just grab one that was displayed near the checkout line? Every such decision is a vote for something about pencils, colors, and market displays. The total of all decisions in a certain area is called the economy of that area, and is measured in the local currency for convenience.
That does not mean that the measurement is the economy. If we break all the windows, does that mean the economy is enriched by the cost of their replacement? That is not an idle question. A few years ago, the federal government decided to pay people to crush their cars and buy new ones. The politicians were quite surprised to learn that a lot of that money went to foreign car makers, and prices of used car parts went out of control for a while because of the interruption in supply.
Always try to remember that economics is the study of reality.