market economy

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TERM OF THE DAY market economy Free market system in which decisions regarding resource allocation,production, and consumption, and price levels and competition, are made by thecollective actions of individuals or organizations seeking their own advantage. In all market economies, however, freedom of the markets is limited andgovernments intervene occasionally to encourage or dampen demand or topromote competition to thwart the emergence of monopolies. Also called free economy, free market, or free market economy. See also open economy. Learn more about this term Usage Example A market economy generally is driven by the system of supply and demand rather than government decisions like in a centrally planned economy.

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