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What does "economy" mean?

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Quick Answer

"Economy" means the total resources of a community or country. Therefore, economy compasses many things, such a money, the wealth of citizens, and the amount of commodities or products available for consumption. Although there are many ways of measuring the economy, the GDP, or gross domestic product, provides one of the best general overviews of the U.S. economy. The GDP measures the total output produced by people and businesses.

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Full Answer

There are four types of economic systems: traditional, market, command and mixed. In a traditional economy, the economic system remains the same from generation to generation. On the other hand, a market economy is constantly changing. A market economy relies on the demand for products and adjusts according to purchasing trends. In turn, the price of products is determined by supply and demand.

In a command economy, the government controls economic activity, and the market trends are only reactive to the decisions of the government. A mixed economy involves some government control, but economic activity is also influenced by purchasing trends.

The U.S. has a mixed economy. The government regulates several different industries, but purchasing trends also play a central role in economic activity. Most industrialized countries also have a mixed economy.

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