Economic institutions are the formal and informal rules that organize economic activity in a society. They work to answer questions about what goods and services should be produced, how they should be produced, and for whom. Other key aspects of economics addressed by institutions include reciprocity through gift exchange, redistribution through taxation and welfare, and different types of market transactions like purchases, loans, mortgages, and bank accounts. Economic institutions help define the relationship between market forces and the role of the state.

1. MODULE 2: CULTURAL,
SOCIAL AND POLITICAL
INSTITUTIONS
LESSON 3:THE ECONOMIC INSTITUTION

2. INSTITUTION
• Is a durable systems of established and embedded social rules
that create a structure for social interactions.

3. ECONOMIC INSTITUTION
• are the formal and informal rules that organize the economic
flow and activity of a society.

4. ECONOMIC INSTITUTION ARE TASKED TO
ANSWER THE FOLLOWING QUESTION:
• 1. what goods and services should be produced?
• 2. how should these goods and services be produced?
• 3. for whom should the goods and services be produced?

5. OTHER FUNCTION AND ASPECT OF
ECONOMICS:

6. 1. RECIPROCITY
- is a form of gift exchange between two parties wherein return
is expected after product or gift giving.
• 2 things occur during the exchanging products:
a. economic gain
b. social gain

7. Transfer/ government transfer/ transfer payment
-Are payments that are made without any good or service being
received in return.
-Example: pensions and welfare benefits
Redistribution
-Is the process of transferring income and wealth- be it in the form of
money, physical property and from one individual to other individual.
-Example: taxation, land reforms, and charity
2. Transfer and Redistribution

8. MARKET/ FINANCIAL TRANSACTIONS
Is basically the system of exchange in a market.
Examples of market transactions:
1. Purchases
2. Loans
3. Mortgage
4. Bank accounts

9. PURCHASES
Is the most common amongst all kinds of transaactions.
LOANS
Is a sum of money that a person may borrow.
MORTAGE
Is a type of loan that was created for purchasers to be able to
make homeownership more attainable.
BANK/ TRANSACTION ACCOUNTS
This type of accounts held in a bank or any other financial
institution that allow individuals available access to money
through cash withdrawals, checks and debit.

10. MARKET AND STATE
Is basically seen a system of private ownership and enterprise
that acts based on their own private and self interest.