EconomyThere are a handful of resource types in the game. In general, you need gold to buy things, magic points to do things with spells, supply points to support a strong army, and victory points to win the game.
For now let's skip magic points -- read the page on magic for an explanation of magic points.
Gold is the easiest resource to understand. Gold is spent when buying units, constructing magic structures, and in some diplomatic treaty changes. Gold is generated from many sources: areas with settlements, diplomatic treaties, some leader skills, and some spells.
Supply is not spent like gold, but is used by units that have a need for support. Not all units need support, but most do. Your supply level does not change unless you conquer or lose an area, or through some spells. Depending on the needs of your units, you may have extra supply or a shortage. All the support requirements for your units are added together, and as long as your supply exceeds their combined need, you will have no problems. If your units' needs are exactly the same as your supply, you won't be able to build any new units that require supply. If your units' needs are greater than your supply, you will start to randomly lose units until you are no longer undersupplied. Think of supply as your capacity to own units. If units were drops of water, supply would be the size of your bucket.
Victory points have only one purpose. To win the game, you'll need more victory points than the other players. Think of them as your "score" during the game. Once a player reaches enough victory points, the game will end and players will be ranked, depending on how many victory points they have. Victory points come from conquering areas and settlements, and from some leader skills and magic spells. Victory points can also be lost through mismanaging some diplomatic treaties. Victory points are not spent or used like gold or supply.
All players receive a certain amount of gold and supply as their "sovereign" right. These resources will continue to be available as long as the player survives in the game.