Economy

Overview

An economy is a complex system of interrelated production, consumption, and exchange activities that ultimately determines how resources are allocated among all the participants[^1^][1]. The production, consumption, and distribution of goods and services combine to fulfill the needs of those living and operating within the economy[^1^][1]. An economy may represent a nation, a region, a single industry, or even a family[^1^][1].

Key Concepts

• Definition: An economy is the total of all activities related to the production, sale, distribution, exchange, and consumption of limited resources by a group of people living and operating within it[^1^][1].
• Types of Economies: Economies can be categorized into market-based economies (also called free market economies), command-based economies, and mixed economies[^1^][1].
• Market-Based Economies: Market-based or "free market" economies allow people and businesses to freely exchange goods and services according to supply and demand[^1^][1]. The United States is mostly a market economy[^1^][1].
• Command-Based Economies: Command-based economies are regulated by a government body that determines the goods which are produced, their quantities, and the price paid for them[^1^][1].
• Mixed Economies: In the modern world, few economies are purely market-based or command-based. But most lean toward one or the other of these models[^1^][1].

Sources

Economy: What It Is, Types of Economies, Economic Indicators - Investopedia