What is a 'Market Economy'
A market economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's individual citizens and businesses. There is little government intervention or central planning. This is the opposite of a centrally planned economy, in which government decisions drive most aspects of a country's economic activity.
What is a 'Centrally Planned Economy'
A centrally planned economy is an economic system in which the state or government makes economic decisions rather than the these being made by the interaction between consumers and businesses. Unlike a market economy — in which private citizens and business owners make production decisions — a centrally planned economy controls what is produced and the distribution and use of resources. State-owned enterprisesundertake the production of goods and services.