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free-market economy

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An economy in which a substantial majority of economic activity is organized through free markets, in which the parties choose the quantities and prices traded without central direction. This is contrasted with a centrally planned economy, in which a substantial majority of economic activity is carried out through central directions to people and firms as to what they must buy and sell, and at what prices. Very few if any economies are either purely free-market-based or centrally planned; most have substantial elements of each.

Subjects: Social sciencesEconomics

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