The 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.

Frequently Asked Questions
  • What is a command economy?

    In a command economy, a centralized government controls the means of production and it decides the output levels for that production. This type of economy is often associated with communist nations. The advantages of this approach include better equality and lower unemployment, but there is often a lack of efficiency or innovation in those economies.

  • What is a market economy?

    A market economy, or free economy, is directed through the laws of supply and demand to set the prices and quantities for most goods and services. Most developed nations are technically mixed economies because they blend free markets with some government interference such as industrial subsidies, licensing, and price fixing.

  • What does inflation do to an economy?

    Inflation means the rate at which the same goods and services come to cost more. If a person's income doesn't keep up with inflation, it can decrease your purchasing power. It can also lower the value of Treasury bonds. But if some level of inflation is expected, it can drive consumer spending, which drives economic growth.

  • How stocks help the economy

    When the price of a large number of stocks is on the rise, it can lead to higher consumer and business confidence, higher spending on big-ticket items such as cars and houses, and an increase in investors entering the stock market. These factors can all lead to greater economic development of a country.

  • What type of economy does the U.S. have?

    The United States has a mixed economy. It combines elements of a command economy with a market economy. A mixed economy allows for government oversight and regulation to achieve public good while also allowing things like consumer goods and services to be regulated by the laws of supply and demand.

Key Terms
Unemployment line
What Is the Unemployment Rate? Rates By State
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Market Economy vs. Command Economy: What's the Difference?
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Is the United States a Market Economy or a Mixed Economy?
What Is the Knowledge Economy?
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Labor Union: Definition, History, and Examples
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Economy: What It Is, Types of Economies, Economic Indicators
Paycheck
Wage Gaps by Race
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What Is Economic Inequality?
Origins of Black Wall Street
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Social Good Definition
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Black Metropolis: How It Helps Us Understand Urban America Today
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New Economy
What Is the American Dream? Examples and How to Measure It
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How Colleges Make Money
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Wage Gaps by Gender
What Is a Centrally Planned Economy?
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The Cost of Unemployment to the Economy
Understanding Contract Provisions
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How Importing and Exporting Impacts the Economy
The Prisoner’s Dilemma in Business and the Economy
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Sluggish Economy
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What Exactly Is a Socialist Economy?
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Unions: How Do They Help Workers?
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How Fire Season Affects the Economy
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Command Economy: Advantages and Disadvantages
Plutocracy Definition
Official Strike Definition
Black Economy
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The History of Unions in the United States
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Halloween's Effect on the Economy
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How Tornadoes Impact the Economy
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Trade Deficit
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The Top 5 Most Unionized Industries
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Command Economy: Definition, How It Works, and Characteristics
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Employability, the Labor Force, and the Economy
Secretariat Building of the United Nations, New York City, New York, USA
United Nations (UN)
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What Is Organized Labor?
The World Bank
World Bank Definition
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What Is Economic Security?
Blue charts
When Is Inflation Good for the Economy?
The Role of Commercial Banks in the Economy
How Is Wealth Measured?
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Why Is Deflation Bad for the Economy?
U.S. States by GDP per capita, 2017
Does East or West Rule the U.S Economy?
Overheated Economy Definition
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Racial Bias in Medical Care Decision-Making Tools
What Are Some Examples of Free Market Economies?
3 Ways Robots Affect the Economy
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What Is the Fourth World?
Is Industrialization Good for the Economy?
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What Is the First World?
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Trade Definition in Finance: Benefits and How It Works
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Disguised Unemployment: Definition and Different Types
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Unemployment
Unemployment Rate by State
What Is Prima Facie?