ECONOMIC AGENTS AND ECONOMIC OPERATIONS

Economic activity is characterized by the existence of two essential functions: consumption and
production. Their analysis cannot be done generally, but by the individualization of elements with
distinctive characteristics and dealings, which constitute independent decision-making centers. From this
point of view, these independent decision-making centers can be treated as economic agents because the
decisions they take are based on well-defined economic activities and attributes.

An economic agent is an independent economic decision-making center. Economic agents can be grouped
into institutional units if they make decisions and act in a similar way. Economic analysis at national
accounting cannot, however, consider agents and institutions separately. For this reason, a grouping of
economic agents was made according to the two essential functions of economic activity: consumption
and production.

This has resulted in:

- the household (family), whose activity is primarily conceived as consumption;

- the incorporated and unincorporated business whose activity is primarily perceived as production.

However, these two groups cannot include all the economic entities that are active in the national
economy. The state, for example, also carries out a multitude of economic activities but cannot be
assimilated to a productive enterprise because its activity is aimed at meeting collective bargaining, first
of all by redistribution, by transfer from one agent to another. Other organizations such as local
authorities, public administration or social assistance have priority as extra-economic activities and can be
assimilated with the Status of the group of agents called administration.

Finally, there is the fourth group of agents: financial institutions that, from an organizational point of
view, resemble productive enterprises but, unlike them, are not productive. They have the role of
centralizing available capital to finance the economy (banks, other financial institutions, insurance).
Economic agents carry out a complexity of economic operations depending on the specificity of their
activity.

So:

a) Operations with goods and services which demonstrate their provenance and destination. In the
national economy, goods and services can only come from production and import. Their destination can
only be for consumption, for investment or for export. Businesses are in a position either to request or to
bid as they want to buy or sell these goods and services;

b) Distribution operations that transfer revenues between different economic agents. Income distribution
takes different shapes and forms, such as wages, dividends, rents, interest, etc.;
c) Financial operations that reflect the connection between the agents in need of financing and the
agencies offering funding opportunities. They refer to debts, claims, credits, etc. and reflects, on the one
hand, the capacity of economic agents that need to fill these requirements and, on the other hand, the
capacity of agents with funding availability to use this reserve;

d) External operations that indicate the aggregate of economic flows between resident (domestic) and
non-resident (external) agents. Outside operations include goods and services exchanges, revenue
transactions and capital flows.