In many such trades, or transactions, one or both parties are human beings. If Mr. A gives Mr. B a fish and Mr. B gives Mr. A two bananas, it is a trade between two people. In other cases, only one is a human being. If a fisherman throws a fish back in the water to get more fish a year later, it is a trade between a person and nature. The first type of trade is called an exchange, while the second is called production.
Economists generally concern themselves with exchanges in which one of the items traded is money.
The use of money greatly simplifies trading, thus lowering transaction costs. Traditional economics focuses on exchanges in which money is one, but only one, of the items traded. Financial economics concentrates on exchanges in which money of one type or another is likely to appear on both sides of a trade. However, both of these aspects are crucial elements in the lives of individuals. Many decisions involve trading money now for money in the future.