Question

How does the image of the "economy" as the "household" affect the way one may think about today's economics? What connotations does the word "household" have that the word "economy" does not have?

Answer 1

Household is one of the sector in the economy that is always present, whether it is a 2 sector economy (households and firms), 3 sector economy (households, firms) and the government), or 4 sector economy (households, firms, government and international trade). Further, it is the household sector that creates demand and provides labor as a factor of production. So, it is the driving force of the economy. So, if the economy is depicted as households, then it means than it is the consumer that is king and all initiatives are taken up to fulfill the needs and wants of the consumers while doing wealth maximization of the organization. Hence, the economy does not exist without the households.
Household has the connotation that it is the creator of demand and it is the end consumer whose needs and wants are satisfied. Such feelings are not about the economy as economy also includes firms, government and international trade with the rest of the world.
Further, it is the household that can provide the labor who work in the firms to produce goods or services. This is what, not being exhibited by the economy. The economy only reflects to be a system where different players interact with each other under the regulatory environment.