PURE MARKET ECONOMY: An economy in which markets answer all allocation decisions and answers all three questions of allocation. There is no government. Markets do it all. This is a theoretical ideal or extreme that does not exist in the real world. As a theoretical ideal, though, it does provide a benchmark that can be used for comparison with real world economic systems.

     See also | economy | economic system | market | allocation | three questions of allocation | pure market economy | mixed economy | capitalism | free enterprise | laissez faire | command economy | pure command economy | communism | socialism |

PURE MARKET ECONOMY, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: July 26, 2024].

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A macroeconomic model relating the price level and real production under the assumption that ALL prices are flexible. This is one of two aggregate market submodels used to analyze business cycles, gross production, unemployment, inflation, stabilization policies, and related macroeconomic phenomena. The other is the short-run aggregate market. The long-run aggregate market isolates the interaction between aggregate demand and long-run aggregate supply. The key assumption of this model is that ALL prices, especially resource prices, are flexible. The primary result of this model is that the economy achieves long-run equilibrium at full-employment real production.

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