Economic Theory

Definition

An economic theory is a set of ideas and principles that explain how resources are allocated, goods and services are produced, and wealth is distributed in a society.

Related terms

Supply and Demand: The relationship between the availability of a product or service (supply) and the desire for it by consumers (demand).

Inflation: A general increase in prices resulting in a decrease in the purchasing power of money.

Gross Domestic Product (GDP): The total value of all goods and services produced within a country's borders over a specific period.