ATAR Notes: Forum

VCE Stuff => VCE Business Studies => VCE Subjects + Help => VCE Economics => Topic started by: william.woon on January 28, 2014, 03:54:14 pm

Title: Explain what is meant by economic activity?
Post by: william.woon on January 28, 2014, 03:54:14 pm

Hey guys, I'm currently rushing with my holiday homework now, which isn't the wisest choice, but I was confronted with the question 'Explain what is meant by economic activity?'. I can't seem to find an easy definition that I could understand. The textbook says: Economic Activity: Volume (or real value) of production, employment, incomes and expenditure in an economy. Thanks :)

Title: Re: Explain what is meant by economic activity?
Post by: chasej on January 28, 2014, 04:23:52 pm

If you look at this image (http://upload.wikimedia.org/wikipedia/commons/thumb/b/b8/Circular_flow_of_goods_income.png/350px-Circular_flow_of_goods_income.png) you would see the most basic economic model. We have households spending income in return for goods and services and business giving income to households in return for labor/workers.

Economic activity is the result of this process. Economic activity thereby is all the production, income, spending etc. occuring in the economy.

It can be useful to think of economic activity as production which in turn implies spending is occurring and income is being generated as per the circular flow model.

Title: Re: Explain what is meant by economic activity?
Post by: william.woon on January 28, 2014, 04:37:02 pm

Thank you chasej, you really helped me clean up my understanding. Thanks.