what makes up an economy
Origins of the Term. The concept of political economy developed in the 18th century in moral philosophy. As the study of the economics of particular states -- or polities -- political economics symbolized the complex relationship between trade and government policy. In the late 19th century, the generic term economics replaced political economy in everyday usage. In modern times, however, the term has seen something of a resurgence.
An economy is a system whereby goods are produced and exchanged. Without a viable economy, a state will collapse. There are three main types of economies: free market, command, and mixed. The chart below compares free-market and command economies; mixed economies are a combination of the two.