market economy
Definition of market economy
: an economy in which most goods and services are produced and distributed through free markets
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First Known Use of market economy
1929
Financial Definition of MARKET ECONOMY
market economy
What It Is
A market economy is structured to allow market forces to determine prices with little or no government involvement.
How It Works
In theory, a market economy's functions are based on fluctuations in supply and demand for specific goods and services across an entire market. This relationship results in market prices that efficiently distribute goods and services among market participants who are willing and able to pay for them. Regulations by government are theoretically unnecessary, since market forces shift supply and demand and signal price adjustments conducive for efficient exchange of goods and services. Capitalism in its purest form exists in a market economy.
Why It Matters
Most developed industrial economies are a hybrid of market economies and government oversight. Fiscal and economic policies are implemented to protect the less fortunate and sustain overall well-being, include minimum wage laws, social insurance programs and subsidized health care.
MARKET ECONOMY Defined for English Language Learners
market economy
Definition of market economy for English Language Learners
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: an economic system in which prices are based on competition among private businesses and not controlled by a government
Learn More about market economy
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Britannica.com: Encyclopedia article about market economy
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