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daily chores.  The economic activity that we engage in will involve numerous transactions – which typically involve the exchange of money for something in return.  For example, the bus ride to school will have required a payment to the bus operator and the use of SMS texting services requires a payment to the telecommunications provider.  

All transactions that we undertake, or indeed all economic activity, naturally take place in an economy.  An economy exists in any place or region around the world where production of goods and services takes place, expenditure on those goods and services occurs and income is made from the selling of those goods and services.  

At this introductory stage, think about production as the process of making a good or services, such as producing a car;  income as the money given to those involved in the production of goods and services, such as wages;  and expenditure as the spending of income on goods and services.