The Economy as a Sum of Transactions

The economy is the sum of all transactions involving goods and services exchanged for money. These transactions occur between different actors such as people, businesses, banks, and the government. The government, composed of the central bank and the central government, plays a significant role in governing the economy through controlling the amount of money and interest rates. Money is obtained through income (salary) or credit (borrowing), and borrowing is based on the borrower's ability to repay. The interconnectedness of spending and income drives economic growth.