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What is Economic Agent?

Meaning of Economic Agent

An economic agent is any individual , environment or entity that has the ability to influence and move the economy. This happens through the possible actions for each of them.

The functions are different depending on the economic agent in question. Together, they form a complete relationship between all the aspects necessary for the economy to work .

What are the Main Economic Agents?

In summary, there are five main economic agents : families, companies, the market, the state and the rest of the world. We will now explain each one individually, reporting its importance and its role in the context of the economy.

families

The family is the grouping given to the group of individuals who work in the market as consumers of goods and services, as well as labor for work and production . Consumption is the main function of this economic agent.

This is a group that has high volume and directly influences other agents. An example of this is the impact on supply and demand , since consumption is one of the vital aspects to move the economy.

Depending on the consumption stimulus of families, other agents must act. If products are bought, it means that there is purchasing power and interest on the part of consumers. Otherwise, action is needed to sustain the economy.

Due to all these characteristics, families are the focus of other participants in the economy . Therefore, understanding this public and what are the best ways to reach it are the concerns of each company, which is the second economic agent .

Companies

Companies also play an important role in the economy , since they offer their products and services to families. Therefore, they play the role of producing goods and services .

The function of companies , although they are institutions, is left to the entrepreneurs who own them. In other words, we are talking about entrepreneurs who have capital and machines to carry out production .

In addition, it is the responsibility of this profile to understand the needs (demands) of families, offering solutions. Finally, they still offer jobs, which allow families to earn income and consume, moving the economy .

Companies can be divided into financial or non-financial institutions.

Market

The market is not exactly an economic agent in the sense of being a person or entity, but an environment that summarizes the meeting between families and companies , which we saw earlier. It is where the entire process of buying and selling between consumers and entrepreneurs takes place.

Within the market, the law of supply and demand is also verified . It is necessary that the interest of the families adjusts to what the companies offer for this exchange to happen.

Condition

Since we are basically talking about the private sector so far, families with low purchasing power end up excluded. In this sense, the fourth economic agent is the State.

Here, the main function is the distribution of wealth and concern for collective needs. In addition, it is the entity with the greatest power of adjustment and market definitions, especially through the organizations related to the economy and the definitions of economic and monetary policies.

World

In times of globalization, the world also becomes an economic agent . This is because relations between countries are growing and, in the current context, directly influence the economy. Its function is to allow the exchange of goods , services and capital.

Political actions taken by the United States, for example, can directly affect the economic problems of other countries in minutes. That is why this economic agent , although more recent, must also be considered.

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