Question

What is an economy? Explain an economy as a system of circular flow?

Answer 1

An economy is the large set of inter-related production and consumption activities that aid in determining how scarce resources are allocated. This is also known as an economic system.
The circular flow of income is a neoclassical economic model depicting how money flows through the economy. In its simplest version, the economy is modeled as consisting only of households and firms. Money flows to workers in the form of wages, and money flows back to firms in exchange for products. This simplistic model suggests the old economic adage that supply creates its own demand.

Answer 2

What is an Economy?

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The state of a country or region in terms of the production and consumption of goods and services and the supply of money.