What is an Economy?

An economy makes decisions about what to do with limited resources.

What is an economy?These decisions include;

  • 1. What goods and services are going to produced,
  • 2. How it is going to allocated the produced goods and services, and
  • 3. Who will get the goods and services.

There will be some degree of government (public sector) involvement, or these decisions may be made by the private sector businesses.

Where the private sector businesses make all the decisions, the system is a market type.

Where the government makes all the decisions, the economy is classed as command. However most are classified as a mixed.

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