An economy is the way that people manage their resources. It includes natural resources, capital, and labor. These are used to produce goods and services.
An economy can be a single industry or a nation’s entire economy. The economy can also be a global system of interrelated production and consumption activities.
Some economies, including those in the United States and China, are considered market economies. Others, such as Taiwan, are considered emerging economies.
There are two main types of economies, free markets and command economies. Each has its own ideals and systems of controls.
Free markets, such as in the United States, are controlled by consumer preferences and government policy. However, the government often intervenes in the economy by putting forth subsidies or other incentives to protect certain industries.
Governments sometimes use subsidies to keep food prices low without bankrupting farmers. Likewise, the government can intervene to help consumers by creating subsidies or other incentives to make products more affordable.
During the 19th century, the industrial revolution helped increase commerce and create stronger ties among countries. Afterward, the internet was developed as a mass media medium. Eventually, the new type of society became a global information economy.
Several types of economic indicators are used to analyze economic activity in a country. They include GDP, a number that reflects the amount of money a nation earns. In addition, the balance of trade is a figure that measures the difference between the amount a nation spends on imports and exports.