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Watch: Introduction to the economy

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What does economy mean?

The word economy describes how a country or place is doing in making goods, and how much money it has. The amount a country sells and makes is called economic activity.

Countries can sell many types of different goods, such as:

  • furniture
  • televisions
  • toys
  • bananas
  • fish

If a country has a lot of goods that are in high demand then it can become wealthier by selling them.

A shop window with five different pairs of roller skates. There is a sign that says 'hydrogen powered rollerskates.'
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What is supply and demand?

If people want to sell things there must be other people who want to buy them.

The more people want something, the more demand there is. This means that they can be sold for more money.

A cartoon pair of blue and white roller skates. They have a badge with Sue's face on them.

However, if there are lots of people selling (or supplying) the same goods, and there are not many people who want to buy those goods, then the demand will drop and the prices will be lower.

This is called supply and demand.

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What makes up the economy?

In the UK the economy is made up of different types of industry.

A photograph of robots welding a car body in a factory.
IndustryWhat is it?What is produced?
ManufacturingWhen things are madeClothing, toys and equipment
AgricultureWhen things are grown or cultivatedFood, farming and forestry
ServiceWhere people sell a serviceBanking, insurance and hospitality
A photograph of some sheep grazing in a meadow.
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Activity: Quiz 鈥 The economy

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