Economy refers to the system of producing, buying, and selling goods and services in a country or region. Think of it as all the ways people make money, spend money, and exchange things they need or want. When a farmer grows corn, a factory makes bicycles, a teacher gives lessons, and students buy school supplies, they're all participating in the economy.

An economy includes everything from neighborhood lemonade stands to giant corporations, from grocery stores to online marketplaces. When news reports say “the economy is doing well,” they mean businesses are succeeding, people have jobs, and money is flowing through all these exchanges. When the economy struggles, it might mean fewer jobs are available or things cost more than people can afford.

The word can also describe being careful with resources. An economy-sized box of cereal contains more for less money per ounce. When someone moves with economy of motion, they accomplish tasks efficiently without wasting energy. A writer praised for economy of language says exactly what's needed without unnecessary words.

Understanding how economies work helps explain why some things cost more than others, why your parents make decisions about spending and saving, and how communities and nations function. Every time you choose between spending your allowance now or saving it, you're making your own small economic decision.