economy


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Economy

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.

economy

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.

economy

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 ?
Hopes for even better days for Brazil's economy are shared by Guido Mantega, the president of Brazil's National Development Bank, BNDES.
I see a number of parallels between the global economy and the world of complexity.
However, Roland Hwang, vehicles policy director for the Natural Resources Defense Council, says that these arguments fail to acknowledge that fuel economy can be raised while saving consumers money.
FDR's New Deal included many government programs aimed at boosting the economy and insulating it against future depressions: price supports for farmers; deposit insurance for bank accounts; Social Security; unemployment insurance; and a Securities and Exchange Commission to better regulate the stock market.
economy likely will not see a recession for years to come.
Unemployment rates could decrease should the economy continue its expansion, he said.
Ironically, Bush could have tailored the tax cuts to be much more advantageous to the economy in the short term, but the reflexive urge to reward his friends at the country dub and on the Business Roundtable seemed to overwhelm even his own political bottom line.
Since fiscal expansion had done little to help the economy, the argument went, the exact opposite was the answer.
The social economy is visible and viable and encourages the application of the social economy concept more broadly.
The United States formally recognized this achievement when, in March of this year, it accorded Kazakhstan the status of a market economy, and these reforms yielded the following impressive results at home in Kazakhstan:
The report, compiled by the Sacramento Regional Research Institute, found that new home construction contributes $40 billion to California's economy and 359,000 jobs annually.