Answers (1)
Did you buy something today? Let's suppose you bought a pencil: what color? What brand? Did you look for a certain kind of pencil or just grab one from the bin by the checkout counter?
All such decisions in a particular area make up the economy of that area. Economy is management, as in the class "Home Economy". Since management always boils down to pinching pennies, the word comes to mean frugality, and since most people never really know what they are talking about, many other meanings might be made up.
In real life, economy is intimately associated with politics, but neither is a replacement for the other. Politicians do not even consider any such limitation on their authority. And that is why the world has one crisis after another.
One of the biggest influences on economic growth is simply leaving the market to work itself out. You can find many examples and analyses of such concepts at www.fee.org