What is instutional unit? Give an example
An institutional unit refers to an entity or organization that is capable of owning assets, engaging in economic activities, and incurring liabilities on its own behalf. It is an essential concept in national accounting and economic analysis to study the behavior and functioning of various economic entities.
One example of an institutional unit is a corporation. A corporation is a legal entity that exists separately from its owners, shareholders, and employees. It can own assets, such as buildings, equipment, and intellectual property; it can engage in economic activities, such as production or providing services; and it is responsible for its own liabilities, such as debts or legal obligations. Corporations have a distinct legal existence and are considered as a separate institutional unit from their owners or employees.
An institutional unit is an individual economic entity that is able, in its own right, to exercise economic and financial decision-making and engage in economic and financial transactions with other entities. It can be a person, a corporation, or a government entity.
For example, a corporation can be considered an institutional unit. It has its own assets, liabilities, and income streams, and it can engage in economic activities such as production, distribution, and consumption. The corporation has its own management, separate from the individuals who own or work for it, and it can make decisions independently from those individuals.