Economy Defined

The economy is a social system that produces, distributes, and consumes goods and services in a society.

Three sectors make up an economy: primary, secondary, and tertiary.

The primary sector refers to the part of the economy that produces raw materials, such as crude oil, timber, grain, or cotton.

The secondary sector, made up of mills and factories, turns the raw materials into manufactured goods, like fuel, lumber, flour, or fabric.

The tertiary sector refers to services rather than goods, and includes distribution of manufactured goods, food and hospitality services, banking, sales, and professional services like architects, physicians, and attorneys.

These three sectors do not exist equally in an economy and have changed considerably throughout the history of humanity.