Finance Guide

The term economy is usually used to describe the sum total of transactions – the buying or selling of goods or services – within a defined geographic area, usually a country, over a period of time. Economists have devised a number of concepts for measuring the size of an economy. Among these are the Gross Domestic Product and the Gross National Product.

It is generally considered desirable that the size of an economy should expand over time since this means that the people within the country become wealthier. Some ecologically-minded people dissent from this view, however, arguing that the high levels of personal consumption prevalent in the Western world are unsustainable because they represent too much of a drain on the earth’s resources.

In modern times, in the developed world, economies have experienced an almost constant expansion, though growth rates among them have differed. Exceptions to this, when economies in fact contracted, have generally been brief and are known as recessions or, in extreme cases, depressions.

Outside of the developed Western world, the picture has been more varied and exhibits more extremes. Cases exist, on the one hand, of economies shrinking over time and, on the other, of experiencing rapid expansion, enjoying much higher rates of economic growth than are common in the West.