What is the institution unit and give an example
The institution unit refers to a specific entity within an organization or institution that is responsible for carrying out a particular function or providing a specific service. It is generally a small organizational unit that operates independently within the larger institution.
For example, in a university, the institution unit could be a department or a school. The Department of Psychology or the School of Engineering could be considered institution units that have their own faculty, students, and administration, and operate autonomously within the university structure. Each unit has its own distinct goals, objectives, and responsibilities within the broader institution.
An institutional unit is a concept in economics and statistics used to define entities that engage in economic activities. It refers to any organization, person, or group of people that makes economic decisions, takes economic actions, or has economic attributes. Institutional units can be households, businesses, government entities, non-profit organizations, or international organizations.
For example, a household is considered an institutional unit because it makes economic decisions such as consuming goods and services, earning income, and saving or investing money. Similarly, a business entity, such as a manufacturing company or a retail store, is also an institutional unit as it engages in economic activities such as producing and selling goods or services.
The term "institutional unit" is used in economics and accounting to refer to an entity that can own goods, engage in economic activities, and can enter into contracts and financial transactions. It is typically applied to organizations or individuals that have economic value and are capable of making economic decisions.
Examples of institutional units include:
1. Companies: Businesses, corporations, and any form of legally recognized organization that produces goods or provides services. Examples include Apple Inc., Walmart, and Google.
2. Government entities: National governments, state or provincial governments, and local authorities that have their own budget and engage in economic activities. For instance, the United States government, the government of Germany, or a city council.
3. Non-profit organizations: Trusts, foundations, charities, and other organizations that are not primarily aimed at making profits and may have a purpose to serve the public or a specific cause. Examples include the Red Cross, World Wildlife Fund (WWF), or Oxfam.
4. Individuals: People can also be considered institutional units, particularly when analyzing their economic activities, such as earning income, consuming goods and services, and making financial decisions.
It's worth noting that the concept of an institutional unit is used in macroeconomics and national accounting frameworks (like the System of National Accounts - SNA) to analyze and understand the behavior of different economic entities and how they contribute to overall economic performance.