A game economy refers to the system that governs how resources, currencies, and rewards are distributed and managed within a video game. It includes elements like in-game currencies, items, and trade systems that players use to progress, purchase upgrades, or enhance their gaming experience. Developers design the game economy to create balance and engagement, ensuring that players feel rewarded for their efforts. This can involve setting prices for items, determining how resources are earned, and creating incentives for players to interact with each other, such as through trading or marketplaces.