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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 ?
Latin America's lackluster economic growth performance over the past decade is to be explained at least in part by its general lack of consistency and depth in implementing economic reform.
But largely because of the globalist economic policies Bernanke extolled at Jackson Hole, his old hometown has all but disappeared.
1976), the Supreme Court once again ruled on economic substance, sham transaction and business purpose.
Historical sociologists and economic historians recently have been stressing institutional constraints on the decision of all actors and even more on how these institutions are created and evolve.
Many Western observers tend to think that the economic development of those countries is inhibited by the tendency not to deal with outsiders.
A clear and fast decision by Governor Pataki to designate one entity, ESD, in the leadership role for economic recovery minimized turf battles.
The result being economic productivity is the difference between employee productivity (EPR) and average cost per person (ACP), multiplied by the number of people employed (P), or:
Helpman provides an interesting account of the most important contemporary theories of economic growth, and his book will be a useful resource for those who would like to know more on the subject.
Even though the economic factors and cooperation within the EU have attained prominence vis-a-vis politics, involving "negotiations" and "bargaining" (economic terminology) rather than "threats" and "warnings" (political terminology), it was clearly "high political" concerns that forced Germany and France (the core and motor of European integration) in the first place to cooperate on their coal and steel production.
Reed, head of the California State University system, said the report mirrors one that his office will release Tuesday on the statewide economic impact of all 23 CSU campuses.
Much of the international economic development is carried out by the International Monetary Fund and World Bank.
Governments in the region increasingly understand the imperative for economic reform;