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The production, trade, and use of goods and services. The economy is the interaction between different actors, such as individuals, companies, and governments, in order to maximize the fulfillment of their needs through the use of scarce resources. The relationship between supply and demand is vitally important to how an economy operates, though economists disagree on exactly how.

There are a number of schools of thought within the study of the economy. Some major schools are classical economics, which considers the sources of production as well as the role of the Invisible Hand of the market, and Marxism, which considers the exploitation of labor by holders of capital. Other, modern schools of thought include Keynesianism, which emphasizes the role of demand as opposed to supply, and monetarism, which promotes the use of the free market and considers the role of money supply in economic growth. See also: Macroeconomics, Microeconomics.


a country defined in terms of the total composition of its economic activities and the ultimate location of economic decision-making.

The total value of goods and services produced in any one year is called the gross domestic product. The contribution made to total output by the various subdivisions of the economy can be split down in various ways: for example, by broad sectors such as the primary sector (agriculture), the industrial sector (including manufacturing) and the tertiary sector (services); or by individual activities (brewing, coal-mining, etc.).

Economic decision-making in the economy may be either highly centralized or decentralized. In a centrally planned economy the State owns the means of production (except labour) and decides what goods and services are to be produced in accordance with a national plan. Resources are allocated between producing units, and final outputs between consumers by the use of physical quotas. At the other extreme, in a private enterprise economy (free market or capitalist economy) the means of production are held by individuals and firms. Economic decision-making is highly decentralized with resources being allocated through a large number of individual goods and services markets. It is the MARKET which synchronizes the decisions of buyers and sellers by establishing market prices which determine how much of a product will be produced and sold. In practice, a large number of countries, including the UK, are mixed economies with some goods and services being provided by private enterprise and others, typically public-utility type products such as postal services and railways, being supplied by the State. The precise mix of private enterprise and State activities to be found in particular countries, however, does vary substantially between the two extremes and is very much influenced by prevailing political ideologies. See INDUSTRY, STRUCTURE OF INDUSTRY, NATIONALIZATION VERSUS PRIVATIZATION.


a country defined in terms of the total and composition of its economic activities. The total value of goods and services produced in an economy in any one year is called GROSS DOMESTIC PRODUCT (GDP). The contribution made to GDP by the various subdivisions or sectors of the economy can be viewed in a variety of ways: for example, either by broad sectors (the PERSONAL or household SECTOR, the CORPORATE or business SECTOR, the FINANCIAL SECTOR, PUBLIC (GOVERNMENT) SECTOR, the FOREIGN SECTOR), or by individual industries. See STRUCTURE OF INDUSTRY, ECONOMIC SYSTEM.
References in periodicals archive ?
Why Economies Grow never directly challenges this economic canon.
12) Are not most economies far "dirtier" and fuzzier, more chaotic than even the master of deconstruction describes?
Clearly, should default become widespread among a number of economies, the flow of international capital to other economies perceived as potentially in similar circumstances will slow and in certain instances reverse.
New consumers in most developing economies are too poor to reciprocate by purchasing goods and services made abroad.
One of the more diversified Caribbean economies is Barbados, which is expecting solid growth in its tourism sector thanks to reopening of several hotels and increased airlift.
Immigrants and young people spending heavily to establish families is a major source of demand and economic vitality in many Western economies.
The first will be to assert that the issue of convergence carries very different meanings depending on whether the comparison encompasses merely the advanced societies or whether it brings in as well developing societies and those societies and economies making the transition from "actually existing socialism" to some variety of emerging market system, and to choose at the very outset to concentrate upon the exten t of convergence, or lack of it, within the more developed societies.
After the early post-World War II period, policies generally fostering low levels of inflation and openness of their economies coupled with high savings and investment rates contributed to a sustained period of rapid growth, in some cases starting in the 1960s and 1970s.
It also shows that the analysis of the interaction between international and domestic political economies is crucial in understanding the process of economic policy reform in Libya.
In a hard-hitting article in the March Foreign Affairs, MIT economist Paul Krugman argues that "competitiveness is a meaningless word when applied to national economies.
From a North American perspective, European policy-makers are trying to do too much too quickly for monetary union, while neglecting the more immediate difficulties that face their own economies.
This monthly country-specific and regional publication gives you a precise picture of the current state of affairs and the future developments in the seven largest markets in Latin America (Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela) plus a snapshot of four smaller economies (Bolivia, Ecuador, Paraguay and Uruguay).

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