Economic Definition of economy. Defined.
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Term economy Definition: The system of production, distribution, and consumption of goods and services that a society uses to address the problem of scarcity. The essential task of an economy is to transform resources into useful goods and services (the act of production), then distribute or allocate these products to useful ends (the act of consumption). Virtually all economies accomplish this task through a combination of decisions made through voluntary market exchanges and involuntary government rules and regulations.