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glossary from economics

economic system

A system of production, resource allocation, and distribution of goods and services within a society or a given geographic area. It includes the combination of the various institutions, agencies, entities, decision-making processes, and patterns of consumption that comprise the economic structure of a given community. As such, an economic system is a type of social system. The mode of production is a related concept. All economic systems have three basic questions to ask: what to produce, how to produce it, and in what quantities and who receives the output of production.

free market

An economic system in which the prices for goods and services are self-regulated by the open market and by consumers. In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority and from all forms of economic privilege, monopolies, and artificial scarcities

command economy

An economy in which the government directs all economic activity

market economy

An economy in which almost all economic activity happens in markets, with little or no interference by the government; often referred to as a laissez-faire ("leave alone") economic system.


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