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 produce the goods and services, and
  • 3. Who will get the goods and services.

Decisions will be made by the  government (public sector) by the private sector businesses. However, in almost all cases there is private and public involvement in the economy, so the economy is call a mixed economy.

In a small number of countries, where the government makes all the decisions, the economy is classed as command economy.

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