We want to live more comfortably. People began to trade for their living. And they traded things that they had made for things that they needed.

Trade became easier when money was invented. The first money used was probably shells, pebbles, or beads. Later people began to use metal bars and coins. Then paper money was invented, and it made trading even easier. Paper bills are easier to carry than large amounts of metal bars or coins.

When there isn¡¯t enough of something for everyone, we say that there is a shortage. When there are shortages, prices go up. When there are shortages of goods and prices go up, businesses try to make more goods.

Then the prices start to come down. Economists study price changes and try to explain and predict future changes. They have named this rise and fall of prices the law of supply and demand.

If wages don¡¯t keep up with inflation, people can¡¯t buy as much. Business slows down, and people are laid off from their jobs. This is called a recession. Banks and businesses close. Many people lose their jobs and their homes.

There are many things that affect the economy. Wars cause great changes in supply and demand. Wars might create jobs. But they also cause shortages and higher prices. People have money to spend, but there are fewer things to buy because the factories make mostly war supplies.

For example, after Korean War, there was a shortage of foods, houses, and other goods. Many people wanted to develop the country which was collapsed by the war. Korean government started ¡®New Village Drive¡¯ to develop the country. More and more people worked very hard and produced enough goods.